Tuesday, December 23, 2014

Kelley Lynch Email To Leonard Cohen's Lawyer Re. Statement For IRS & FTB

From: Kelley Lynch <kelley.lynch.2010@gmail.com>
Date: Tue, Dec 23, 2014 at 12:32 PM
Subject: 2004 and 2005 federal and state tax/corporate matters
To: Jeffrey Korn cc:  IRS, FBI, DOJ, FTB, Multiple Recipients


I am enclosing a draft of the Statement I intend to provide IRS and FTB together with my 2004 and 2005 federal and state tax returns.  As of today, I am not in receipt of IRS required form 1099 from Cohen for the year 2004.  I have not received any information (K-1, etc.) from Traditional Holdings, LLC, Blue Mist Touring Company, Inc. or Old Ideas, LLC for the years 2004 and 2005.  The illegal K-1s transmitted to IRS/State of Kentucky by LCI for the years 2003, 2004, and 2005 have not been rescinded.  

The default judgment, entered May 2006, does not indicate that it is retroactive and does not advise Cohen that he may subvert IRS reporting and filing requirements.  This is something that will be addressed in my federal lawsuit.  

Please let me have your comments.

Kelley Lynch

Summary of Leonard Cohen Complaint
Statement for IRS & FTB
Re. Fraudulent Misrepresentations in Complaint

Kelley Lynch Corrections & Comments in text – BOLD.

            This Statement is being submitted as a supplement to my 2004 and 2005 federal and state tax returns.  It is my personal belief that Leonard Cohen, and certain of his representatives, have used a default judgment (in a lawsuit I was not served and where the Court has no jurisdiction) to cover up what I was told is criminal tax fraud and obstruct justice.  Ann Diamond’s draft article for Rolling Stone, together with Neal Greenberg’s Complaint against Cohen and his lawyer, Robert Kory, provide a good, solid background to the situation at hand.  Exhibit A (Ann Diamond Article); Exhibit B (Neal Greenberg Amended Complaint).

            On or about April 15, 2005, I reported allegations that Leonard Cohen committed criminal tax fraud.  The lawsuit he filed with LA Superior Court on August 15, 2005 is retaliatory and entirely fabricated.  It willfully disregards all corporate books, records, stock units, agreements and understandings, as well as previously filed federal and state tax returns related to numerous entities.

            In April 2012, I discovered that Leonard Cohen obtained a fraudulent tax refund in December 2005.  He and his representatives evidently submitted the Los Angeles Superior Court Complaint, together with some version of a highly fraudulent expense ledger, to IRS substantiating a “theft loss” although there was and remains no theft loss.  In December 2013, I discovered that Leonard Cohen also obtained a fraudulent tax refund from the FTB.  I believe the Complaint in Case No. BC338322, together with the fraudulent expense ledger, was submitted to the FTB.  Both refunds have now been challenged, with IRS and FTB, as fraud. 

            For the past 10 years, Leonard Cohen has willfully refused to provide me with IRS required form 1099 for the year 2004.  And, while the default judgment was entered in May 2006, Cohen also willfully refuses to provide me with K-1 (or other corporate forms) for the years 2004 and 2005.  Those forms would relate to my ownership interest in the following entities:  Blue Mist Touring Company, Inc., Traditional Holdings, LLC, and Old Ideas, LLC.  Furthermore, Leonard Cohen is the sole owner of LC Investments, LLC. This entity has transmitted K-1 partnership documents to IRS and State of Kentucky for the years 2003, 2004, and 2005 indicating that I am a partner in that entity, own 99.5% of that entity, and received $0 income from LCI for those years.  Cohen, and his representatives, willfully refuse to rescind these illegal K-1s.  Additionally, in order to properly prepare my federal and state tax returns, I require an accounting that takes into consideration my ownership interest in these entities as well as assets, liabilities, and equity.  A complete and proper accounting is necessary and there should be valuations of the IP assets assigned (or which should have been assigned) to Blue Mist Touring Company, Inc. and Old Ideas, LLC.

            This Statement also addresses the fabricated narrative Cohen has used to replace and conceal evidence. 

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct


                                                                        Kelley Lynch

CASE NO. BC338322

1.       Cohen is an accomplished poet, novelist, recording artist and musician with a successful
career spanning nearly four decades.  His first album “Songs of Leonard Cohen” was recorded in 1967, which was followed by thirteen more albums.  Cohen’s latest album, “Dear Heather” was released in 2004.  His stature in the music industry is legendary.

2.       This civil action is another case of a tragedy that has become all too familiar in the music
industry – a business manager and professional advisers exploit an immensely talented artist’s loyalty and trust through greed, self-dealing, concealment, knowing misrepresentation and reckless disregard for professional fiduciary duties.  As a result of Defendants’ misconduct, Cohen has lost millions of dollars, including most of his retirement savings.

This case is nothing other than Leonard Cohen’s retaliation against Kelley Lynch for reporting allegations that he committed civil & criminal tax fraud to IRS on April 15, 2005 and thereafter.  It is nothing other than a highly fabricated and fraudulent narrative that willfully disregards all corporate books, records, stock units, understandings and agreements, as well as federal and state tax returns.  Kelley Lynch was not served this lawsuit and the proof of service remains evidence of extrinsic fraud.  The judgment itself is void. 

3.      Kelley Lynch was Cohen’s business manager for approximately seventeen years until he
fired her for cause in October 2004.  Cohen fired Lynch upon his discovery that she had been siphoning monies from his personal bank and investment accounts substantially in excess of the 15% management compensation to which she was entitled.  A preliminary analysis shows that Lynch has wrongfully taken approximately over $5 million of Cohen’s earnings over approximately seven years.  When confronted by Cohen, Lynch admitted to having taken “millions” because she had “got in over her head.”  However, Lynch has wrongfully refused and continues to wrongfully refuse Cohen’s requests for an accounting.

From approximately April 1988, immediately following Marty Machat’s death, Leonard Cohen hired Lynch as his personal manager.  She work in that capacity (and others) until on or around October 21, 2004.  Lynch never worked as Cohen’s business manager and did not handle corporate, tax, financial, accounting, or legal matters on behalf of Cohen. 

In October 2004, Leonard Cohen heard that Kelley Lynch intended to report what she felt was tax fraud to IRS.  Cohen also understood that Lynch had replaced the accountant they shred, hired a new accountant, and was referred to tax lawyers.  On October 27, 2004, DiMascio & Berardo substantially set forth the outstanding issues between Lynch and Cohen.  Those issues related to numerous corporate entities, Lynch’s ownership interest in those entities, and any potential liability Cohen exposed Lynch to in connection with those entities.  After receiving DiMascio & Berardo’s letter, requesting a meeting, Cohen came up with a novel defense:  willfully disregard all corporate books, records, stock units, non-revocable assignments, agreements and understandings, as well as all federal and state tax returns.  See DiMascio & Berardo letter to Westin dated October 27, 2004.

Leonard Cohen did not fire Lynch.  He begged (and demanded) her to privately provide him with the corporate records for BMT, TH, and LCI.  Cohen wanted Lynch to assist him and Westin in unraveling their handiwork in connection with these entities.  Lynch refused to meet with Cohen and Westin who planned to fly into LA the weekend of October 30, 2004.  In the alternative, she provided her lawyers with the corporate books and they, in turn, transmitted copies of the BMT and TH books and original of LCI to Greenberg, Glusker who were representing Cohen as of October 30, 2004 when Cohen, accompanied by Westin and Ricardo Cistero (Greenberg, Glusker) met with Lynch’s lawyers.  Lynch misappropriated nothing from Leonard Cohen who has continuously taken the legal position that he is the alter ego of numerous entities who has engaged in self-dealing.  Lynch has a 15% ownership interest in all IP that was assigned (or should have been assigned) to BMT and Old Ideas, LLC. 

Leonard Cohen did not confront Lynch and she never said she had taken “millions” because she had “got in over her head.”  Lynch had not gotten in over her head, owns the IP and is well aware of that, and was working on lucrative deals as of the fall of 2004.  She was also well aware that Cohen planned (and was contractually obligated) to tour. 

Lynch did not wrongfully refuse Cohen’s requests for an accounting.  Leonard Cohen is the individual who was in possession of all royalty statements, contracts, corporate, and business records that would permit him to have a complete and proper financial accounting prepared.  Cohen is the individual who willfully refuses to provide Lynch with an accounting that includes corporate ownership interests.

4.      Lynch gained control of Cohen’s financial affairs through a long process of carefully
cultivated trust.  When Cohen’s former business manager died in 1988, Cohen turned to Lynch because, as his former business manager’s assistant, she had gained valuable institutional knowledge of Cohen’s business affairs and intricate record contracts.  During the ensuing years, Cohen gained respect for her capability and developed an abiding trust.  Cohen relied on Lynch to handle his business and financial affairs so that he could focus upon his recording career and his creative life.

List Cohen’s testimony, statements, etc. re. my position, when he hired me in the role, etc.

Lynch did not handle Cohen’s financial affairs.  Leonard Cohen oversaw his financial affairs and hired investment advisors to work with him.

5.      In late 1994, after completing a successful tour following his album release in 1993, Cohen
decided to spend some time at the Mount Baldy Zen Center in Los Angeles, California.  Cohen remained there for nearly five years leading a life of rigorous religious discipline.  Cohen left the Zen Center in 1999.

Leonard Cohen was not in a rigorous religious retreat for nearly five years.  He did spend time on Mt. Baldy, 45 minutes from Los Angeles, and was frequently in Los Angeles where he owns a duplex.  During his Mt. Baldy phase, Cohen had a deluxe cabin complete with computer, fax, keyboard, and recording console.  Leonard Cohen was well aware that he delivered his last studio album in 1993.  He was contractually obligated to submit a new studio album to Sony within 24 months of his last album.  During this period, Cohen put together at least one live album, recorded two new tracks for that album, worked on his future Book of Longing, and focused on lithographs.  See August 2000 LC Declaration – CAK deal.

6.      After nearly thirty years in the music industry, Cohen could afford to take a few years off to
lead a quiet spiritual life away from the mainstream.  Given his modest lifestyle, Cohen reasonably expected royalties from his song copyrights and records should have been sufficient to support him during his retirement years. 

Leonard Cohen did not participate in a formal, rigid retreat.  While he did spend time on Mt. Baldy, he was dedicated to work on at least one live album, a studio album, lithographs, material for the future “Book of Longing,” and spent a tremendous amount of time providing material to the Leonard Cohen files website in anticipation of these releases.  Leonard Cohen was contractually obligated to submit an album to Sony not later than 24 months following the delivery of his last studio album.  That album would have been The Future which was delivered in 1993.  The following studio album, Ten New Songs, was not delivered until 2001.  Therefore, Leonard Cohen was not in a position to lead a quiet spiritual life away from the mainstream and he did not.  Cohen participated in a documentary, gave interviews, recorded new material, and frequently spent time in Los Angeles where he had a house.  Leonard Cohen has now embellished his retreat story to explain that he was on Mt. Baldy when he discovered irregularities in his accounts.  Cohen views all corporate accounts, and assets, as his own and has consistently argued that he is the alter ego of numerous entities who engaged in self-dealing.  As Robert Hilburn noted, in his September 1996 interview, Leonard Cohen did not turn his back on the world:  “The 61-year-old songwriter and poet hasn't turned his back on the world. He frequently heads down the mountain to Los Angeles in his four-wheel-drive vehicle, either to visit an affiliated Zen center, to visit his daughter in the Mid-Wilshire area or meet with Kelley Lynch, his manager.”
Cohen had three royalty producing assets:

Properly explain the royalty producing assets.  LCSMI is not a royalty producing asset. It is an entity that entered into a stock sale with Sony/ATV in 1996.

Leonard Cohen Stranger Music, Inc. (LCSMI), a music publishing company that owned the copyrights to his substantial song catalogue;
·         Artist royalties (Artist Royalties) payable pursuant to his Recording Agreement with Sony Music dated 1967, as amended;
·         Writer’s royalties (Writer’s Royalties) Cohen received from the public performance of his songs, payable pursuant to Cohen’s Writer’s Agreement with LCSMI, pursuant to which he earned the customary writer’s share (50%) of mechanical and performance royalties.

7.      During the Mount Baldy years, Cohen voluntarily elected to reduce his income by foregoing
touring and new albums.  Lynch did not accept a corresponding decline in her income.  Instead, without Cohen’s knowledge or consent, she began paying herself a greater portion of Cohen’s royalties than she was entitled to receive.

As explained above, Leonard Cohen did not “voluntarily” elect to reduce his income by foregoing touring and new albums.  He was contractually obligated to deliver a studio album.  The notion that I did not accept a corresponding decline in income and, without Cohen’s knowledge, or consent began paying myself a great portion of Cohen’s income that I was entitled to receive is laughable.  As of August 2000, Leonard Cohen is well aware of the income he generated.  He signed a Terms & Conditions letter with CAK and understood the income required to secure the bond deal he was pursuing and ultimately decided not to go through with.

8.      Lynch also initiated a second strategy to supplement her income.  She introduced Cohen to
her friend Neal Greenberg, an investment advisor and founding principal of Agile Group, to propose that Cohen transfer his investments from Dean Witter (now Morgan Stanley) to Greenberg’s firm.  Greenberg introduced Cohen to Richard Westin, a tax professor and tax lawyer.  Lynch then worked with Greenberg and Westin to begin plotting the sale of Cohen’s income producing royalty assets for her own benefit and to Cohen’s detriment.

Neal Greenberg was and is not a friend of mine.  I knew his ex-wife, Karen Greenberg, and Cohen met Greenberg when he flew into Los Angeles at some point in 1996 to meet with His Holiness Kusum Lingpa, a Tibetan Buddhist teacher who had a center in Los Angeles.  My husband, Douglas Penick, and I introduced Cohen to Bud Talbot, Dean Witter Reynolds, when he asked for a referral to an investment adviser.  Leonard Cohen is the individual who personally met with and hired Neal Greenberg.  Greenberg then introduced Cohen to Richard Westin and Ed Dean, two lawyers involved in restructuring LC Stranger Music, Inc. and two charitable remainder trusts in anticipation of the 1996 Sony sale.  No one plotted the sale of Cohen’s assets.  Leonard Cohen is the individual who demanded these sales and demanded complex stock sales which were unattractive to most potential purchasers.

9.      With the help of Greenberg and Westin, and under the guise of “saving taxes” and “estate
planning” for the benefit of Cohen’s two children, she orchestrated the sale of Cohen’s music publishing company in 1997 (the 1997 Sale) and his Artist Royalties in 2001 (the 2001 Sale) for a combined total of over $12 million, ostensibly to fund Cohen’s retirement.  Also, with the help of Greenberg and Westin, and the complex transactions invented by them, she retained control of almost all of the royalty sale proceeds.

I would not be involved in any type of scheme that related to “saving taxes” and/or “estate planning” for the benefit of Leonard Cohen.  Leonard Cohen had a team of advisers overlooking those aspects of his affairs.  I did not retain control over the royalty proceeds.  All proceeds were paid directly to Leonard Cohen, the two charitable remainder trusts, Mt. Baldy Zen Center, and Traditional Holdings, LLC.  Review amounts paid, when, and to whom.

10.  Cohen believed that he had hired Westin and Greenberg to protect his retirement savings,
but in fact, they burdened the sales with transaction fees in excess of $4 million, and they devised unnecessarily complex corporate structures that allowed Lynch to steal over $5 million for her own benefit without Cohen’s knowledge of consent.

No one burdened these sales with transaction fees other than Leonard Cohen.  These transaction fees are Leonard Cohen’s personal business expenses and not expenses related to Traditional Holdings, LLC or possibly other entities.  Lynch did not steal and/or misappropriate anything.  Leonard Cohen has merely decided to willfully disregard all corporate books, records, and ownership interests.  He has decided to willfully disregard the non-revocable IP assignments to Blue Mist Touring Company, Inc.

11.  Lynch, Westin, and Greenberg only belatedly informed Cohen of the transaction costs
related to these sales.  When the issue arose one year after the 2001 Sale, they concealed the full extent of the costs.  They also failed to advise Cohen that Lynch controlled all of his retirement savings to such an extent that she could withdraw funds as she pleased from Cohen’s accounts managed by Greenberg.

Leonard Cohen was not “belatedly” informed of his personal business expenses related to these sales.  He personally hired his representatives, frequently signed retainer agreements, and understood that he hired these individuals to work for him.  This issue never arose in 2002.  The $1 million and $7 million 1099s from Sony to Leonard Cohen caused Leonard Cohen, and others, to become hysterical in or around January 2002.  Following the 2001 close of the second Sony sale, Leonard Cohen personally signed a fax authorizing Neal Greenberg to pay his personal transaction fees from Traditional Holdings, LLC assets.  At that time, Greenberg provided a checkbook which was used to pay those fees.  Leonard Cohen has also decided to willfully disregard corporate distributions, profits & losses, management fees, and the corporate entities themselves.

12.  Cohen only learned that Lynch had converted almost all of his retirement savings for her
own benefit when he was approached by an informant working in Lynch’s management company known as Stranger Management.  In mid-October 2004, the informant advised Cohen’s daughter that Lynch had a complex scheme to hide the facts that she had appropriated almost all of Cohen’s retirement savings.

It seems impossible to believe that Leonard Cohen believes I converted his retirement savings for my own benefit, given the fact that with respect to Traditional Holdings, LLC alone, Cohen borrowed or caused to be expended approximately $6.7 million.  Cohen understood that his “loans” had to be repaid within 3 years at 6% interest.  In fact, he signed an Annuity Agreement which set forth the fact that loans to him were permitted as long as they were repaid within 3 years.  There was and remains no “informant.”  I have now heard that the alleged “informant” is one Julie Isenberg.  This individual worked for my greeting card company for a period of approximately 1 week in August 2004.  She was supervised by my mother and was incapable of packing a greeting card order let alone reviewing corporate books, records, financial documents, corporate ownership interests, accountings, etc.  Julie Isenberg ultimately ended up assaulting Betsy Superfon’s maid, stealing her jewelry and dog, and stripping/doing drugs in Las Vegas.  Exhibit __ - Annuity Agreement.

13.  In response to the informant’s allegations, Cohen began his own direct review of his
financial affairs in October 2004.  Upon discovery of irregularities in his bank accounts at City National Bank (CNB), he terminated Lynch and removed Lynch from any control of his accounts.  Lynch initially feigned cooperation, while immediately attempting and ultimately succeeding in a last minute raid of accounts over which she had control.

In September 2004, Lynch hired a new accountant, Dale Burgess, to handle certain matters for her.  That included filing her 2003 federal and state tax returns.  In mid-October 2004, Leonard Cohen flew into Los Angeles unannounced and informed Lynch that he heard she planned to report what she believed was tax fraud to IRS.  Cohen offered her whatever she wanted and, as the months unfolded, he offered her 50% community property and other compensation.  In order to receive the compensation for her services and value of her IP assets, Cohen asked Lynch to testify against Greenberg, Westin, and others.  Cohen advised Lynch that he wanted her to testify that he was defrauded by his advisers.  That is not what Lynch personally witnessed.  She refused to settle with Cohen.  Cohen’s personal CNB account was not under Lynch’s control.  She was a signer on the account due to the fact that he frequently traveled.  Cohen’s personal CNB bank statements were mailed to his home and he signed most checks made payable from that account.  There was no last minute raid on his personal CNB account.

14.  Cohen also contacted Westin and Greenberg in the hope of verifying that the funds under
Greenberg’s management were still intact.  Greenberg refused to discuss the accounts except to say that Westin had placed Cohen’s retirement savings in a legal structure over which Lynch had complete control and to refer Cohen to Westin.  When Cohen challenged Westin as to how this could have happened, Westin acknowledged that he had never fully explained the transaction to Cohen and then sent Cohen a belated written explanation.  Cohen ultimately learned that of the $5 million under Greenberg’s management, only $150,000 remained.

Both Greenberg and Westin repeatedly explained these transactions to Leonard Cohen, Lynch, and others.  And, to ensure that no further confusion arose with respect to the TH deal, Lynch asked Westin to prepare the March 2002 letter outlining this structure, and Lynch’s role, for her and Cohen.  I have not seen Westin’s “belated written explanation” to Cohen with respect to the TH transaction.  Exhibit __ - RW letter.

15.  Only by the end of January 2005 did Cohen realize that Lynch’s misappropriation of millions
of dollars had been facilitated, and even enabled, by and through Westin’s and Greenberg’s negligently complicitous conduct.  Once the communications among Greenberg, Lynch, and Westin were examined, it became clear that, as Lynch was raiding Cohen’s till, both Greenberg and Westin chose to disregard their respective professional fiduciary duties to Cohen.  They both looked the other way, and in some cases covered up her actions, as Lynch took millions of dollars of Cohen’s money.

16.  Through the misrepresentations made by Defendants, Cohen believed that the 1997 Sale and
the 2001 Sale were financially necessary.  The fact is that Cohen’s royalties were ample to support his modest lifestyle.  Lynch concealed the amount of Cohen’s royalties and her misappropriation of those royalties, thereby creating a sense of urgency to sell assets.  The sales of Cohen’s intellectual property assets were only required to facilitate Lynch’s access to Cohen’s funds and to generate large transaction fees for professions.

Leonard Cohen demanded these sales.  It was not due to financial necessity but rather due to the fact that Cohen felt the music business would collapse over digital downloading and the internet.  He also understood that many lucrative publishing deals were being entered into and the Bowie Bond was of interest to Cohen and other artists.  It is absurd to conclude that these deals were required to facilitate anything other than Cohen’s interest in pursuing them.  He has merely come up with an entirely fabricated narrative that willfully disregards all facts, evidence, and corporate ownership interests. 

17.  By this lawsuit, Cohen seeks a full accounting from Lynch so that Cohen may determine the
extent and magnitude of Lynch’s misappropriation of Cohen’s monies; the restitution of millions of dollars wrongfully take from him by Lynch; and the return of Cohen’s business and legal records wrongfully withheld from him by Lynch.

Leonard Cohen is the individual in possession of all materials necessary to prepare a proper accounting.  That would include, but is not limited to, all contracts, agreements, royalty statements, bank statements (corporate and personal), etc.  Lynch took nothing from Leonard Cohen and Leonard Cohen is not the corporate entities but is very clear that he is the alter ego of numerous corporate fictions.  Leonard Cohen, and his daughter, picked up his business and legal records from Lynch’s office.  Cohen abandoned boxes of extremely old documents at Lynch’s house and failed to make arrangements to retrieve them.  Lynch’s lawyers transmitted the corporate books and records (TH, LCI, and BMT) to Greenberg, Glusker in October 2004.  They represented Leonard Cohen for a short period of time.

18.  The lawsuit also seeks to hold Westin liable for his professional negligence in his
representation of Cohen.  Westin’s nearly nine-year legal advisory relationship with Cohen was rife with undisclosed conflicting professional loyalties in Westin’s simultaneous representation of Cohen, Lynch, and the various legal entities Westin formed on Cohen’s behalf.  Westin concurrently represented both Cohen and Lynch in several transactions without full disclosure or informed consent, when their representative interests as Artist and business manager in such transactions were clearly conflicted.  These transactions were to the substantial detriment of one of Westin’s clients, Cohen, and in substantial favor of his other concurrent client, Lynch.  Westin also drafted corporate organizational documents that were favorable to Lynch’s interests, rather than Cohen’s, and gave Lynch extraordinary control over Cohen’s assets in a retirement vehicle established for Cohen’s benefit but inexplicably 99.5% owned by Lynch.  Additionally, Westin, a tax professional, failed to monitor the financial conditions of the various corporate entities he formed for Cohen.  By preparing and filing tax returns for Cohen’s various corporate entities, Westin had actual knowledge of Lynch’s misconduct and misappropriations.  As Cohen’s legal advisor, Westin had a duty to zealously guard and protect Cohen’s interests, and by failing to information Cohen of Lynch’s misconduct, breached his duty to Cohen.

I provided Richard Westin with a very limited power of attorney permitting him to form Traditional Holdings, LLC.  Other than that, Richard Westin represented Leonard Cohen and evidently continued to do so until April 2005.  As Greenberg’s Complaint notes, it is irrelevant who owned what share of TH.  It had an annuity obligation and Lynch and Cohen entered into a binding Annuity Agreement in December 2000.  Evidently, Leonard Cohen now finds aspects of that agreement unsatisfactory. 

BMT – owns all IP prior to Dear Heather
LC and LCI (possibly others) – collects royalties on BMT assets
TH – sold something it does own
Old Ideas, LLC – should own Dear Heather IP

Exhibit A
Ann Diamond Draft Article – Rolling Stone

Thursday, July 3, 2008

Whatever Happened to Kelley Lynch? 

Kelley Lynch is the woman accused in 2005 of skimming millions from singer Leonard Cohen’s retirement fund. I knew of her through friends of Leonard Cohen, and had heard her described in glowing terms as the agent who, singlehandedly, saved Cohen’s career in the 1990s. 

In early May of this year, Lynch suddenly contacted me. She said she was mainly interested in my perceptions of Cohen as a former friend and next door neighbour in Montreal. At one time I also studied with his Zen Master in California, and had spent time with him on Hydra, Greece.

Not having heard her side of the story (I doubt that anyone has, apart from a circle of her closest friends), I was curious. Over the next few weeks, she shared several documents pertaining to the case including an affidavit written and signed by her older son, Rutger.

Together, they paint a picture very much at variance from the sketchy media image of Lynch as a reckless, delusional woman on the brink of a career meltdown. Lynch's own timeline also includes disturbing behind-the-scene dealings that suggest she may have been set up to take the blame for Cohen's tax situation.

The following account is based on what Lynch has sent me --

Since 2005 when she became the object of media gossip, little if anything has been heard from Kelley Lynch.

A single mother with two sons, Lynch was Leonard Cohen's personal manager from approximately 1988 to 2004, and was known for her skill, hard work, and dedication. Until 2004, Kelley lived and worked in Los Angeles where she still has many friends and acquaintances in the entertainment world including Phil Spector and Oliver Stone.

Her own account of the events that wrecked her career, varies widely from the media portrait of a reckless, delusional woman in the throes of a personal meltdown. The meltdown was real, however. By late December, 2005, Lynch had lost custody of one son and was homeless and living on the streets with her older son, Rutger, who witnessed the chain of bizarre events that had begun a year earlier. 

In 2004, Lynch owned a house in Brentwood, and still worked for Cohen, who owed her money for royalties and other services, but was increasingly involved with his new girlfriend, Anjani Thomas, ex-wife of Cohen’s attorney, Robert Kory. 

In retrospect, Lynch believes she was set up by Cohen’s lawyers and accountants to help cover up a tax situation which made the IRS “nervous.” In November 2004, Cohen’s attorney Kory told Lynch that a financial entity known as Traditional Holdings, LLC could be overturned by the IRS. Lynch, who had been selected as a partner on the entity, became uneasy and consulted a new accountant, who referred her to tax lawyers, who found irregularities in Cohen's tax history, both in the US and Canada where he has residences.

Rattled by what she was hearing – that she was being dragged into criminal tax fraud -- Lynch called the IRS in Washington and also contacted their website. An IRS collection agent advised her to call the Fraud Hotline, which she did.

Told that any further action on her part might implicate her in fraud, Lynch refused to meet with Cohen or turn over the corporate books. At that stage, Cohen’s advisers began claiming that certain payments, distributions, or advances made to her were actually "over-payments." Lynch says their accounting was incomplete and ignored her share of intellectual property, unpaid commissions and royalties, and share in Traditional Holdings, LLC. Apparently Lynch had also been issued K1 partnership tax documents and made a partner on another Cohen investment entity, LC Investments, LLC, without her permission or awareness.

Lynch says an increasingly nervous and desperate Cohen was pressuring her to agree to mediation and told a friend of hers that Lynch was "the love of his life." She and Cohen had had a brief affair in 1990, but Cohen now was offering her 50% of his "community property" as well as "palimony" through lawyer Robert Kory at a meeting attended by Lynch's legal representatives and her accountant, Dale Burgess. To Lynch, none of this made sense at the time.

Meanwhile, the Los Angeles District Attorney's office received an anonymous tip informing them that Lynch was a friend of producer Phil Spector, whom Lynch maintains is innocent. Cohen, on the other hand, had given an interview in which he described a gun-waving Spector who threatened him during recording sessions in 1977.
At around the same time he was offering her “millions”, Lynch says, Cohen was also circulating slanderous stories about her. She believes Cohen encouraged Los Angeles record producer Steve Lindsey, the father of her son Ray, to initiate a custody suit – on May 25, 2005, the same day a 25-man SWAT team from the LAPD, acting on a bogus 911 call, suddenly cordoned off her street and surrounded her home in response to a "hostage taking."

Earlier that morning, Lynch says, her 12 year old son Ray woke up not feeling well. She sent an email to his school informing them she was keeping him at home. When the boy's father found out Ray was home he became agitated and abusive over the phone to Lynch.

Lynch says she had young people who worked for her coming and going that day, and did not want Ray’s father coming to the house and attacking her, as he had in the past. She called her older son Rutger, who was visiting a friend nearby, and asked him to pick Ray up and take him down the hill where actress Cloris Leachman waited in her car. Leachman, a friend of Lindsey, took charge of Ray – just as seven LAPD squad cars came speeding up Mandeville Canyon Road in the direction of Lynch’s house. With them was Ray’s father, Steve Lindsey.

Lynch says she looked out the window and saw armed men on her lawn. Her son Rutger and his friends were telling police there was no hostage-taking, that they had spent the morning with Lynch, and that there must be some mistake. For reasons no one understands, LAPD/Inglewood PD decided to believe Steve Lindsey, who had left the scene.

Police later gave varying explanations about what led up to the incident. West LAPD said they responded to a report that someone heard "shots fired." But a company that oversees SWAT said Lynch would have to have a superior caliber weapon to warrant such a high risk entry. A member of the SWAT team claimed to have seen a note that Lynch’s sister had placed the call stating Lynch posed “a danger to herself and everyone around her.” Her sister denies this.

Lynch stayed inside her house and called her former custody lawyer, Lee Kanon Alpert. She also called Leonard Cohen, assuming he had played a role in the events unfolding on her lawn. Lynch says she knew Steve Lindsey had also been meeting with Cohen and his attorney, and had recently told their son Ray that Lynch was “going to jail,” upsetting the boy. She says Cohen taped the phone call later used in his successful court case against her – for which, Lynch says, she never received a summons.

Lynch says, “Police were on my hillside and crouching under my kitchen window.” She says the standoff on her lawn continued for several more hours, disrupting the neighbourhood. Members of Inglewood Police Department also participated in the operation.

Eventually, she decided to go into the back yard. Seeing her son Rutger acting as a “human shield and hostage negotiator,” Lynch ventured out front with her Akita on leash and joked to the cops: "Who am I supposed to be holding hostage? My dog?"

The police responded by telling her son they would only shoot Lynch and her dog if necessary.

“That was when I dove into the pool.”

SWAT team members searched her house. As they entered, Lynch's African Grey parrot, Lou, called out: "I see dead people!" – further alarming the nervous cops.

Offering her a hand out of the pool, one officer said they were only there to help her and not to hurt her.

“No one asked me if I was all right; no one questioned me about my well-being.” The Medical Examiners Office later wondered how the police had evaluated her. After stating they were not arresting her, they handcuffed Lynch, still in her bikini. On her way out the door, her son managed to hand her a brocade jacket.

Although she lived near UCLA Medical Center, she was taken in a squad car to King-Drew Medical Centre in Watts, 40 miles away and a three-hour drive in traffic. Known as one of America’s worst hospitals, King-Drew was recently closed down as a place where patients routinely die from neglect and medical errors. During the long ride through South Central Los Angeles, Lynch says she was questioned closely about her relationship with Phil Spector, who had been charged with first degree murder of Lana Clarkson. In the car, Lynch voiced concern over what awaited her at the hospital but was told by a woman cop: "This will be good for you."

“I felt I was being kidnapped”.

At Emergency, the admitting psychiatrist administered anti-psychotic drugs without authorization and left Lynch in the waiting area for hours, still in her bikini and brocade jacket, and handcuffed to a chair. A nurse advised her she would be transferred – but did not tell her where. Examining her file, the nurse noticed it listed her as 19 years old with wrong social security number, wrong date of birth, wrong religion, and her name misspelled as "Kelly Lynch" Lynch thinks it was the same file she had seen, several months earlier, in the hands of the Special Investigator who came to question her about Spector.

A second doctor told her to wait her turn to ensure no further harm would come to her, and assured her that nothing in the King Drew report could cause her to lose custody of her child. The following day, she was released after nearly 24 hours in the psych ward.

Back home, Lynch learned that while she was being held at the hospital her younger son's father, Steven Clark Lindsey, had filed for custody of her son Ray Charles Lindsey and obtained a restraining order denying her access to the boy. She says Lindsey attempted to convince doctors at King Drew that she was dangerous, in order to have her committed, She says Lindsey also threatened the psychiatrist who had her released.

On that same day, Cohen’s attorney Robert Kory filed a Declaration in the custody matter, as did Betsy Superfon (a friend of Cohen, Kory and Lindsey who had befriended Lynch a few months earlier ). Superfon later told Lynch she didn't realize what she was signing, and that Cohen had offered Lindsey money “or something else” to take Ray away from Lynch.

Her older son alleges Lindsey offered him money to go to Leonard Cohen's lawyer's office and transfer or sign over Lynch’s house to Cohen or his attorney Robert Kory. Rutger refused and phoned his own father, who advised him to contact a lawyer.

Two weeks later, in early June, as she drove down her street to buy dog food, a Mercedes sped out of a neighbouring driveway and rear-ended her car, Lynch was thrown forward, fracturing her nose against the steering well, and was knocked unconscious. Later, she says, as she drove back up the hill to her home, the same driver was standing in his driveway and called out: “We are watching you” as she passed.

Seeing his injured, bleeding mother enter the house, her older son again phoned his father, who may have called 911. Accounts vary as whether the call referred to an incident of "domestic violence" or a "drug overdose." Either way, police arrived at Lynch’s door for the second time in two weeks. Over the protests of her son, they entered while she was on the phone to a friend, Dr. Wendi Knaak who stayed on the phone talking with Rutger while police again handcuffed Lynch. This time they took her to UCLA hospital where her obvious head injuries were ignored. Instead, she was once again drugged and placed in the psychiatric unit where she remained for several days.

Lynch and her advisors maintain these events were coordinated by Cohen, Kory and Lindsey, with the help of former LA District Attorney Ira Reiner in a well- orchestrated plan to traumatize and discredit her – paving the way for media stories which accused her of skimming millions from Cohen’s retirement fund.

In the summer of 2005, as Lynch was struggling to save her home and protect her child from a father her friends describe as "viciously anti-social" and “violent”, reports of Leonard Cohen's financial troubles hit the press. They alleged the 70-something singer had been scammed by his personal manager, Kelley Lynch, who colluded with an advisor at the AGILE Group in Colorado to send him false financial statements while emptying his accounts of millions of dollars.

Although listed as the owner of Traditional Holdings, the entity in question, Lynch says she never received any statements from the AGILE Group -- who instead had been sending them to Cohen -- having changed her mailing address to Cohen's home in Los Angeles. She has since filed a complaint with the US Post Office for mail tampering.

She insists Cohen sued her because she went to the IRS about his tax situation. She says he is not, and never was, "broke" and that missing funds went to buy homes for his son Adam Cohen and girlfriend, singer Anjani Thomas, ex-wife of Robert Kory. Noting Cohen is famous for his financial largesse and once gave Zen Master Sasaki Roshi $500,000 as a gift, Lynch also cites hefty payments to advisers, various transaction fees, personal taxes, and other monies which may have been sent offshore.

While Cohen and Lindsey attempted to persuade others, including LA Superior Court, that she intended to flee to Tibet or another non-extradition country, Lynch was isolated and penniless and still in Los Angeles. Lynch was former personal secretary to the late Chogyam Trungpa Rinpoche, a flamboyant Tibetan spiritual teacher who founded Naropa Institute in Boulder, Colorado in the 1970s, and died in 1987. She says various Tibetan lamas are praying for her safety.

Journalists covering the story were either unable, or didn't bother, to track Lynch down, and most reported Cohen's statements as fact. The NY Times contacted Kelley for a quote which they never printed

By July 2005, Lynch had lost her custody battle and Ray went to live with his father. On December 28, she and Rutger were evicted from the house in Brentwood, and ended up homeless in Santa Monica, which has no resources for the homeless. The Police Department gave her no help and, she claims, laughed when she brought in evidence that she was being stalked by a known serial killer while she camped on the beach.

In 2006, Cohen was awarded a symbolic $9 million settlement in a civil suit against Lynch, who still does not have a lawyer representing her. Corporate books and other evidence of fraud appear to have been overlooked by Judge Ken Freeman in his judgment, Lynch says, although she admits she has not read the court documents and was never served a summons. At the time of the decision, she told reporters she lacked the money to make a phone call. That same year, her older son lost his fingers in an accident with a meat grinder while he was working at Whole Foods in Los Angeles and Lynch could not afford a bus ticket to visit him in hospital.

Lynch heard through a journalist that Cohen later testified for the District Attorney’s office in a secret grand jury relating to the Phil Spector case with former District Attorney Ira Reiner acting as his lawyer. Reiner is a personal friend of Cohen, and as D.A. presided over some high-profile cases including the “Night Stalker” serial killer and the McMartin Day Care scandal.

Recently, on June 17, 2008, Cohen's lawsuit against the Agile Group was thrown out of court for lack of evidence. In response the AGILE Group dropped its counter-suit accusing Cohen of defamation and fraud. AGILE still claims to be shocked that a singer of Leonard Cohen's talent and stature would engage in false accusations against his own representatives. 

Lynch believes Cohen and AGILE colluded to defraud her. She continues to deny all allegations against her, and remains hopeful that Phil Spector's lawyer, Bruce Cutler, will represent her in recouping damages to her livelihood and reputation. She now lives in another state and recently learned her younger son, 15, whom she has not seen since July 2005, stopped attending school last January.

These days Cohen’s fans seem to have expended their rage at Kelley Lynch for driving their idol into bankruptcy. Some now say she unwittingly did them a service -- by forcing him to go on tour for the first time in nearly two decades.

At 74, singer-songwriter Leonard Cohen continues to ride a wave of sympathy, gathering wide support from the music world and even some British royalty. Unquestionably, his career and finances have benefited from news reports that he is too impoverished to retire.

From his tower of song, Cohen has written:

I smile when I'm angry
I cheat and I lie
I do what I have to do
To get by

And I’m always alone
And my heart is like ice
And it’s crowded and cold
In my secret life

My Secret Life. Leonard Cohen

His many admirers need to listen closely.

Exhibit B
Neal Greenberg Amended Complaint



I, Kelley Lynch, agree with the following factual statements and was a witness to much of what was addressed in Neal Greenberg’s Amended Complaint (Denver District Court, Case No. Case 1:05-cv-01233-LTB).  Therefore, Neal Greenberg and I are in agreement with respect to the following facts.  See Neal Greenberg Amended Complaint & Exhibits attached hereto and made a part hereof.  Kelley Lynch opposes all statements raised in Greenberg’s Complaint and not contained in the following excepts taken directly from the Amended Complaint.  See Amended Complaint (2005 and 2006) attached hereto and made part hereof.

Dated:  23 October 2014

Kelley Lynch

Neal Greenberg. Vs. [HEADING]
Denver District Court, Case No. Case 1:05-cv-01233-LTB
Judge Lewis Babcock

Defendant Leonard Cohen (“Cohen”), a noted recording artist, acting directly on his own behalf, and through his agent and attorney, Robert Kory (“Kory”), has threatened to take or has taken, improper and unlawful actions, including bribery and intimidation of a witness, subornation of perjury, defamation 

Cohen’s extortion scheme was eventually exposed by Lynch and ultimately frustrated 
Cohen has made clear that he asserts rights over certain investment funds that belong to Traditional Holdings, LLC (“Traditional Holdings”), a dissolved Kentucky entity that was managed and 99.5% owned by Lynch and 0.5% owned by Cohen.

From the early 1990s, impressed with a new strategy used by other Hollywood celebrities to cash in on their future revenue streams from IP rights and increase short-term income (called a “Pullman
 or “Bowie” bond, after the artist David Bowie who first used it), Cohen … worked aggressively with advisors, including Greg McBowman, to auction off portions of his IP to the highest bidder. 

Lynch arranged for Cohen to have a first meeting with Greenberg in 1996 to discuss Cohen’s investment options for the proceeds from the anticipated First Sony Sale.

During this meeting, and at Cohen’s request, Greenberg suggested ways in which Cohen could structure the investment of his proceeds from the First Sony Sale so as to reduce tax consequences and generate substantial income.

Cohen worked with, and began to be represented by, a creative tax attorney and law professor from the University of Kentucky, Richard Westin (“Westin”).  Cohen also had other advisors and consultants working with Lynch on his business, music and tax matters, including Greg McBowman … Ken Cleveland, as well as Stuart Fried and other attorneys at the law firm of Grubman Indursky & Schindler, P.C.

Ultimately, Cohen decided to transfer some of the income from the First Sony Sale into charitable remainder trusts. On October 30, 1996, Cohen established three trusts: the Sabbath Day Charitable Trust (the "Sabbath Day Trust"), the Cohen Family Charitable Trust (the "Cohen Family Trust"), and the Cohen Remainder Trust (the "Remainder Trust") (collectively, the “Trusts”).

Cohen … repeatedly withdrew large amounts of the Trusts’ assets. On repeated occasions, TAS notified Cohen (both directly, when possible, and per instruction through Lynch) that Cohen was spending more than recommended from the Trusts, and thus, was draining down the Trusts’ principal.

On one such occasion, on April 13, 2001, Greenberg, on behalf of TAS, wrote to Cohen:  “I am writing to you to discuss the income withdrawals you’ve received from your portfolio and to provide you with some helpful guidelines for the future. When we originally constructed your portfolio in 1997, you may remember that we had extensive conversations about how much you required for your annual living expenses.”

In or about 1999, Cohen put more of his IP up for auction. In 1999, Sony and Cohen … negotiated for a second sale of IP to Sony for about $8 million (the "Second Sony Sale").  The artist royalties to be sold were represented by Cohen as being held by another … entity, Blue Mist Touring Co., Inc. ("Blue Mist").  Cohen was the Chairman, President, and majority shareholder of Blue Mist, owning 425 shares, while Lynch was the Assistant Secretary and minority shareholder of Blue Mist, owning 75 shares, or 15% of the company.

Cohen asked Westin, and in the spring of 2000, Greenberg, to provide advice about how to invest the anticipated proceeds from the Second Sony Sale and minimize the sale’s tax burden.

Cohen leapt at this opportunity to minimize his tax burden [via Traditional Holdings, LLC], just as he had explored all possible means of reducing his taxes in years past, such as by seeking a tax credit for donating his papers to a Canadian museum [University of Toronto], and using artifices in dealing with Sony to avoid paying any Canadian taxes (as a Canadian citizen) on his royalty income earned in Canada.

Westin’s proposed plan had the following basic components: a limited liability company – which eventually became Traditional Holdings – would be created. Blue Mist would transfer certain IP assets to Traditional Holdings in exchange for a deferred annuity, to be paid to Cohen beginning in about 10 years. Traditional Holdings would then sell the assets it received from Blue Mist to Sony. The tax plan prevented Cohen, the annuitant, from owning more than a de minimis interest in Traditional Holdings.  Therefore, Cohen would own less than 1%, and another person – who ultimately was Lynch – would own the remaining LLC interest (more than 99 percent).

Westin outlined this proposal to Cohen and Lynch both orally and in a series of letters and other written communications between October 2000 and December 2000. See, e.g., Exh. 1 attached.

In these written communications, Westin explicitly warned Cohen that since the annuity plan gave significant transactional control to Lynch, and also potentially placed tax and other burdens upon her as majority shareholder, the plan would work only if Cohen and Lynch maintained (as they had in the past) a long-term relationship of personal and professional trust which would secure their mutual obligations as manager of the obligor (Lynch) and annuitant (Cohen). See, e.g., Exh. 2 attached.

Cohen carefully reviewed, understood, and signed off on the ownership structure of Traditional Holdings – including the fact that Lynch would own 99 percent of Traditional Holdings’ membership interests, so as (among other reasons explained by Westin) to avoid any suggestion of self-dealing.

First, Cohen reviewed the Traditional Holdings Articles of Organization, and reviewed and executed the Traditional Holdings Operating Agreement, which set forth in detail the entity’s ownership structure and managerial procedures. See Traditional Holdings Articles of Organization and Operating Agreement (Exh. 3 attached).

Second, Cohen participated, at his request, in conference calls with Westin and Lynch and/or Greenberg during which the structure was carefully reviewed.

Third, Cohen talked about the structure of Traditional Holdings privately with Lynch, including when he forced her to discuss it with him while he took a bubble bath.

Fourth, in addition to several explanatory faxes he received from Westin describing Traditional Holdings, Cohen communicated specific questions, through Lynch, relating to Traditional Holdings’ ownership and transactional structure, which questions Westin answered in a letter written directly to Cohen on December 4, 2000, and faxed (as with his prior memos) directly to Lynch and Cohen. See, Exh. 2.

Moreover, regardless of whether Lynch owned 1 percent or 100 percent of the shares of Traditional Holdings, Cohen knew or should have known that she had or came to have authority – through a durable power of attorney and pursuant to her role as Traditional Holdings’ manager – to act, and give directions, on Traditional Holdings’ and on his own behalf. See, e.g., Exh. 3.

Likewise, no matter who owned the majority of shares of Traditional Holdings, the obligation to fulfill a deferred annuity obligation to Cohen remained the same. Thus, Cohen's interests in the firm (the long term annuity payments) were identical, no matter how his purported ownership interest in the assets were held and invested in the interim.

In December 2000, Westin created Traditional Holdings as a Kentucky limited liability company. Lynch was named as the initial manager in the Articles of Organization, and both Cohen and Lynch were appointed as managers in the Operating Agreement. Id. Also in December 2000, Cohen signed a Private Annuity Agreement with Traditional Holdings which document sets forth Traditional Holdings’ annuity obligations to Cohen. See, Private Annuity Agreement (Dec. 7, 2000) (Exh. 4 attached). Lynch signed the Private Annuity Agreement on Traditional Holdings’ behalf. Westin maintained, and continues to maintain, that the company and its annuity contract with Cohen are legitimate under prevailing interpretations of the federal tax code.

To purchase her ownership interest in Traditional Holdings, Lynch was required to submit to Traditional Holdings a promissory note for $240,000. It was agreed that Lynch would receive a salary and/or distributions from Traditional Holdings sufficient to pay down the $240,000 promissory note and to cover tax liabilities. See, Exhs. 2 and 3.

As set forth in the Operating Agreement, Traditional Holdings was authorized to issue loans to its members, Cohen and Lynch, as long as the loans were paid back before the annuity obligations commenced. See, Exh. 3.

In April 2001, the Second Sony Sale was completed. The gross proceeds of the Second Sony Sale were approximately $8 million, less certain identified costs, expenses, and holdbacks for undelivered work.

Of these proceeds, Cohen had already requested and received $1 million as an advance in November 1999. Cohen was well aware of this $1 million advance because it became the subject of a tax dispute with the Internal Revenue Service in 2002.

Of the remaining proceeds of the Second Sony Sale, [certain] amounts were paid to cover the costs involved in closing and negotiating the Second Sony Sale:
$350,000 Grubman Indursky & Schindler, P.C. (attorneys for Cohen)
$333,750 McBowman Consulting Group (consultants for Cohen)
$30,450 Epstein Backer & Green, P.C.
$1,101,250 Stranger Management (commissions to Lynch's company)

Kelley Lynch comments in bold:  The following amounts, as confirmed in Cohen’s Complaint, should have been fully addressed in Neal Greenberg’s Amended Complaint.  Cohen’s Complaint, Clause 61, confirms that transaction fees related to the 1st and 2nd Sony deals totaled approximately $4.7 million and listed the following amounts:

$1.2 million – Stranger Management
$350,000 – legal fees (Grubman, Indursky firm)
$350,000 – consultant fees (Greg McBowman)
$500,000 – for federal income taxes and penalties due on Sony’s $1 million advance paid on the sale in 1999.
$100,000 – Richard Westin legal fees
$200,000 – Leonard Cohen’s settlement fees re. failed CAK bond deal

Additionally, Cohen withdrew approximately $592,000 as a “shareholder loan” from the Traditional Holding account to purchase homes for his son and girlfriend.  The Greenberg Complaint confirms that $2,084,518 belonging to Traditional Holdings, LLC was deposited into Leonard Cohen’s account.  Leonard Cohen also personally received $1 million advance on the Traditional Holdings, LLC 2001 sale and failed to transfer this amount to the corporate entity.  The above expenses, loans, income and deposits total:  $6,376,518.00.  In addition to this, a Promissory Note was prepared and signed by Leonard Cohen.  That Promissory Note addressed an additional approximate amount of $355,000 Leonard Cohen owed Traditional Holdings bringing the total to:  $6,626,518.00 with interest in the amount of 6% per annum. 

None of these listed expenses had anything to do with either the formation of the annuity plan or
with Traditional Holdings’ dealings … Westin did receive a modest fee for his work on the Traditional Holdings documents, and for consulting with Sony on Cohen and Traditional Holdings’ behalf. 

Agile Group [sent] official monthly statements to Cohen at the Larchmont Address (the record address for Traditional Holdings) setting forth the performance of the Traditional Holdings’ funds invested in the Agile Safety Fund. See, e.g., Exhibit 6 (example of monthly statements sent by independent outside administrator). In addition, Agile Group, LLC sent monthly letters to Cohen which, as a courtesy, summarized the deposits into and withdrawals from the Agile Safety Fund by Traditional Holdings. Id. (example of monthly summaries sent by Agile Group, LLC).

No sooner had Traditional Holdings been funded, however, than Cohen – just as he had done with the Trusts’ assets from the First Sony Sale, and notwithstanding Greenberg’s prior warnings about draining down investment money – began to dissipate the Traditional Holdings funds, jeopardizing his own long-term annuity interests, as well as the company’s legitimacy. Greenberg and others were immediately alarmed by Cohen's desire and tendency to treat this company like his own personal piggybank, out of which he could borrow or take distributions against his annuity benefits.

For example, almost immediately after the funding of Traditional Holdings, Cohen took out a loan for $50,000. This was followed, during 2001 and 2002 alone, by several loans to Cohen … to cover tax liabilities, houses for Cohen's son and his current girlfriend, and living expenses. These 2001-2002 loans to Cohen –amounting to over $1 million – were deposited directly into Cohen’s personal bank account at City National Bank in Beverly Hills, California.

In March 2002, Greenberg [spoke to] Cohen directly by telephone, Cohen “admitted he was spending too much and seemed a little shaken when [Greenberg] reminded him how much he had just spent on gifts to friends."

Lynch repeatedly assured Agile Group, LLC and TAS that the loans from Traditional Holdings were being properly documented with Westin’s assistance. Cohen’s tax attorney, Westin, also was aware of and in regular communication with Lynch [Cohen, Greenberg, and Cohen’s other representatives] concerning the shareholder loans and other aspects of the affairs and management of Traditional Holdings.

The March 5, 2002 Traditional Holdings Board Meeting Minutes, prepared at Westin’s direction, state “that the level of borrowing was undesirable and [the members] expressed their assent that further borrowing was discouraged, even though the borrower’s [Cohen’s] credit and collateral were good.”

Cohen, however, gave no sign that he had any intention of abating his spending habits. In an e-mail to Lynch dated March 4, 2002, Cohen thanked Lynch for “keeping [him] informed,” and instructed her to “give lots of money to everyone.”

Because these shareholder loans were to be repaid, and because it was necessary to protect the entity’s integrity for tax purposes, these shareholder loans were properly characterized, on Cohen’s tax attorney Westin’s advice, as Traditional Holdings assets when calculating the entity’s value.

Lynch, on Cohen’s behalf, sent e-mails to Colorado in response to Greenberg’s warnings, defending the loans, giving assurances that all of the loans were proper and documented, and assuring that they would be paid off when Cohen received the money from another, upcoming Sony transaction. 

In October 2004, Cohen and Lynch had a major falling out, the details of which remain unknown to Plaintiffs. As a result of this falling out, the Third Sony Sale – which appeared to be on the verge of consummation – never happened.

On October 21, 2004, Cohen personally contacted Greenberg by e-mail and informed him that Lynch was “busy with other aspects of [his] career,” and therefore, Cohen had “relieved her of all financial responsibilities.” Cohen further stated that Lynch “need not be copied on your statements or reports,” and that Cohen's new accountant would “be in touch.” 

 On October 22, 2004, Cohen sent another e-mail to Greenberg stating that Lynch “no longer represents me,” and directing Greenberg not to “respond to any of her instructions.” 

On or about October 24, 2004, Cohen again communicated directly with Greenberg by e-mail, stating that his business address was no longer the Larchmont Address or Keniston Address. With allegations flying fast and furious from Cohen – and later Kory – that Lynch was acting without due authority from Cohen, remarkably, a request to change Cohen's record address was left on Plaintiffs’ general voice mailbox by Anjani Thomas. Only later did Plaintiffs learn the identity of Ms. Thomas – Cohen’s current girlfriend, and Kory’s ex-wife.  Thus, Plaintiffs demanded an original signature from Cohen on a document verifying the new address

Given Lynch’s position as manager and 99.5% owner of Traditional Holdings, and learning of the apparent schism between Lynch and Cohen, Agile Group, LLC became concerned about whose directions as to the Traditional Holdings account it was legally obligated to follow. On October 24, 2004, Agile Group, LLC communicated with Westin – Cohen's attorney who had created Traditional Holdings – and inquired: “Does Leonard in your view have equal authority over the accounts that we manage? What if there are contradicting directive on those accounts that we manage? For example if KL says 'take money out' and LC says don’t take money, what is your view . . . .” Westin confirmed that because Cohen held a membership interest in Traditional Holdings, Agile Group, LLC could share information with him about Traditional Holdings’ investments. Westin could not, however, answer the issue of conflicting directives, and instead referred Agile Group, LLC to Traditional Holdings' governing documents (drafted by Westin), which documents provided little, if any, guidance on the issue. 

At or about this same time (October 22-24, 2004), Cohen phoned Greenberg. Cohen said that he thought Lynch had been taking money from Traditional Holdings without Cohen's authorization. He claimed that Lynch was using the money to support a gigolo and to fund shopping sprees at Neiman Marcus, and suggested that Lynch and Westin may have colluded to defraud him.  When Greenberg reminded Cohen that Westin had warned Cohen in 2000 that "the biggest risk" from Westin's tax avoidance plan “was that Lynch would own his [the] assets and he would have lost control,” Cohen stated that he recalled that initial warning. 

According to Lynch, however, Cohen regularly visited his management offices, often in Lynch’s presence, and reviewed and discussed his mail with her, all of which was kept on his desk to facilitate such review, including all correspondence, reports, and statements from the Agile Safety Fund’s independent, outside administrators, and from Plaintiffs.

Cohen then turned to his agent and attorney Kory to deal with Lynch, Westin, and Plaintiffs.

Based on these checks, Agile Group, LLC calculated that, of the loan money withdrawn from Traditional Holdings:

a. $2,084,518 had been deposited into Cohen’s own personal bank account;
b. Lynch personally had outstanding loans of approximately $293,000, which loans she represented had been disclosed to and sanctioned by Cohen;

Her abrupt termination frustrated Lynch's ability to make good on any loans through her share of receipts from the Third Sony Sale, the "Dear Heather" album, a pending sale of original lithographs, or other sources, and left her in a precarious financial position …

In November 2004, Lynch was asked by [Cohen] to appear without the benefit of counsel at a meeting with Cohen, Kory, and …  Greenberg, Glusker law firm acting as legal counsel for Cohen, and to sign certain legal documents related, inter alia, to unwinding Traditional Holdings on the spot [settle with Cohen].  Lynch refused to do so without benefit of counsel, and subsequently received advice from a variety of legal, accounting and tax professionals, including but not limited to Mike Taitelman, Dale Burgess, Dianne DiMascio, and an IRS officer named Betzer, that she was wise not to sign, because such action could have been fraudulent. 

[NOTE:  Lynch did not receive this specific advice from IRS Agent Betzer.  Lynch spoke to Agent Betzer on April 15, 2005 and thereafter about the allegations re. Leonard Cohen’s tax fraud and numerous corporate entities.  Agent Betzer first advised Lynch to bring this matter into the IRS with an attorney and then later instructed her to contact the IRS fraud unit.]

Lynch claimed that she had substantial, unsatisfied interests in Cohen's business entities and/or intellectual property. If Cohen were to attempt to recover money from Lynch, she would likely assert counterclaims alleging that Cohen owes her, and has never paid, substantial amounts of money; and, according to Lynch, and upon information and belief, such possible improprieties included, but were not limited to, the retention by Blue Mist and other persons or entities of IP that should have passed through Traditional Holdings to Sony, the failure to reference or disclose the annuity obligation, loan obligations, and other important matters on Traditional Holdings’ corporate tax returns, and Cohen’s failure to properly document Traditional Holdings’ transactions.

Because any attempt to recover money from Lynch was likely to be both futile and treacherous, Cohen, Kory, and other unnamed co-conspirators (including Steve Lindsay, Betsy Superfon, and John Doe Nos. 1-25) … conspired ...

Thus, for example, although the attorneys and accountants involved in the Second Sony Sale structured and received hefty fees for that transaction, which Kory charged were excessive, Cohen and Kory decided not to pursue any of those persons because they would not be easy targets, and because many of them – principally Sony and its law firm and advisors –continued to do business with Cohen profitably. Instead, Cohen and Kory decided to go after Plaintiffs, none of whom had any role whatsoever in that Sony transaction and/or received any benefit therefrom. 

[NOTE:  In a Memorandum Kory provided to Lynch’s lawyers, Ira Reiner and Kevin Prins, he raised issues related to fraud in the inducement against members of the Grubman firm and Greg McBowman.  Kory advised Lynch’s lawyers that they were considering going after Ken Cleveland.  Kory also advised Lynch that she had a cause of action against every one of Cohen’s representatives and they would assist her with those claims if she provided testimony against Cohen’s representatives and advisers.]

He [Leonard Cohen] told Greenberg to "be a man" and contact his insurance company.  “Please do talk to the insurer. A great deal of suffering can be avoided.”

Cohen with affirmative support from Kory, Steve Lindsay and Betsy Superfon, and John Doe Nos. 1-25, all acting toward a common end and each for his or her own purposes, began to direct an extortion scheme …

Cohen and Kory indicated that, unless Plaintiffs obtained insurance funds … Cohen would go out on tour to promote his new album, and would give interviews to reporters in which he would state or insinuate that he was touring because he had been bankrupted by the improprieties of his financial advisors.

Cohen and Kory knew full well that, from Plaintiffs’ perspective, once a celebrity were to raise such allegations of fraud and breach of duty against them, the damage would already be done, no matter the ultimate outcome.

Cohen and Kory began to pressure Lynch to assist in the extortion scheme against Plaintiffs. Specifically, they requested that she falsely testify … Cohen sought to obtain … testimony from Lynch knowing that the testimony would be false. 

Lynch's cooperation in Cohen’s extortion scheme was critical. Cohen believed that he could not only use Lynch as a witness against Plaintiffs, but could also buy or coerce her silence as against himself at the same time.

Thus, Cohen pressed for private "mediation" as an alternative to a public lawsuit, knowing full well that with Lynch's cooperation and silence, many of the critical documents concerning Cohen's financial affairs – documents that indubitably show … his aggressive tactics to avoid taxes at all costs, and his desire to capitalize on and benefit from all of his intellectual property during his lifetime to fuel an extravagant lifestyle – would not be the subject of discovery

Thus, by deliberate misrepresentations and omissions of critical facts … Cohen could knowingly and deliberately misrepresent his objectives and sophistication as an investor, his long history of aggressive tax management, his long history of exploitation of his IP for immediate gain and profit, his profligacy …

For example, Cohen affirmatively misrepresented to Plaintiffs that Lynch had simply forged his signature on various documents, knowing full well that she had not done so, or had signed with his full authority (as borne out by his subsequent actions – such as purporting to state claims based on agreements with TAS bearing his signature, and revoking a power of attorney bearing his signature that he acknowledged executing).

Cohen likewise falsely asserted that at no time had he authorized any of the shareholder loans from Traditional Holdings, and made various accusations against Lynch for which he had no basis in fact …

As one example, he claimed never to have known, prior to November 2004, that Lynch was the majority shareholder of Traditional Holdings, thereby implying that he had been deceived by Plaintiffs and Westin.  He also denied receiving information about Lynch's role as managing the obligation to pay his annuity, and denied ever receiving any information from Plaintiffs other than some monthly email summaries, even though he was easily able to retrieve Plaintiffs’ other written warnings, reports and correspondence from [Lynch’s] own Keniston office address in 2004, and was reported by Lynch to have regularly visited the office, reviewed his mail, and discussed Traditional Holdings' loans and his other accounts with her on a regular basis.

In particular, starting in March 2005, Cohen began to assert that Plaintiffs were responsible for the loss of $8 million, which figure included many millions of dollars which they knew Cohen had, in fact, received and previously spent in support of his own extravagant lifestyle.

… according to Lynch and others, he was prepared to admit or agree with Lynch that she owed Cohen nothing.

Having garnered the support of Lynch's then-attorney, Dianne DiMascio (“DiMascio”), Cohen felt
confident enough in January 2005 to misrepresent to Plaintiffs’ counsel, through Kory, that Lynch was then of the view that she, along with Cohen, was a victim of the misconduct of Plaintiffs and Westin.

Cohen and Kory continually sought to purchase or coerce Lynch’s cooperation

In a demand letter from Kory to DiMascio, Kory wrote:  I want to reemphasize my position that I am willing to work with you as part of a settlement between Mr. Cohen and Ms. Lynch in going after Westin’s and Greenberg’s insurers as a source of restitution.

Thereafter, on January 11, 2005, Kory wrote to DiMascio, telling her that [Ira Reiner believed] “properly framed letters to Greenberg and to Westin would cause their insurance companies to show up.”

Lynch declined to attend the meeting in person. Instead, DiMascio went to the meeting on Lynch’s behalf in early February 2005, after which she reported to Lynch: “[Cohen and Kory] want your cooperation in pursuing [the Plaintiffs] and Richard Westin. In this regard, they seem to want you to acknowledge that you knew that Neal [Greenberg] and Richard [Westin] wanted to defraud Leonard and that you approved their conduct.”

Repeatedly, from at least November 2004 through April 2005, Kory made known
to Lynch, directly, through counsel, through Steve Lindsay (the father of Lynch’s youngest child
and one of Cohen’s record producers), through Lynch’s accountant Dale Burgess, through
accountant Mike Taitelman, and through others among her friends and relatives, that he had
extraordinary negotiating authority from Cohen to "forgive" any obligations of Lynch, to treat
them as a gift, to make additional payments to her or her family members (including disguised as
"palimony" on the pretext that Cohen is the father of one of her children), to make good on
Lynch's shares of IP rights or legal entities, or even to dedicate a hefty percentage to her of
whatever funds could be extorted from Plaintiffs and other advisors with her cooperation.

Kory tried to do this directly in late spring 2005 when he met Lynch for lunch and tried to persuade her to work with Cohen to “go after” Plaintiffs [and all of Cohen’s representatives].

Cohen and Kory also worked indirectly.  For example, they recruited Lynch’s erstwhile friend and longtime “friend” of Steve Lindsay, Betsy Superfon, a person of some notoriety due, among other reasons, to her entrepreneurship in the telephone sex trade. On numerous occasions, Kory [and Cohen] used Lindsay and Superfon to try to “broker” deals with Lynch …

In one such conversation, in May 2005, Superfon, according to Lynch, called Greenberg “the kingpin” and a “criminal” and pleaded with Lynch to cooperate with Cohen for “[her] heart, [her] health, and [her] kids” and recommended that Lynch “get out of this.”  Superfon promised that she could “settle this for [Lynch] immediately,” and stated that “Leonard and Kory [are] trying to get you out of this situation.”

When Lynch requested a settlement agreement in writing during a later conversation, Superfon, according to Lynch, stated that when she asked Kory to fax Lynch a settlement, Kory said “you can’t fax this kind of a deal. It has to be discussed.”  [Superfon advised Lynch that she personally believed the deal they were offering was illegal.]

Through Lindsay, Superfon and other friends, relatives and acquaintances, Cohen and Kory delivered the message that giving in to Cohen’s wishes would be in Lynch’s best interest.

When these tactics to draw Lynch into his extortion scheme proved futile, Cohen and Kory – according to Lynch – turned to far more aggressive means to obtain her cooperation.  Indeed, as heard by other witnesses, Cohen and Kory vowed to “crush her,” and planned to use restraining orders and other means to prevent her from serving as a credible witness regarding both Cohen's affairs and in regard to the scheme into which they had tried without success to draw her.

Consistent with that vow and plan, and according to Lynch and other witnesses, and on information and belief, Cohen and Kory's tactics to terrorize, silence, or disparage Lynch have included, inter alia, the following:

a. contacting City National Bank, where Lynch, Lynch’s son .., all had personal banking accounts, and convincing City National Bank to put a freeze on … their accounts;

b. alleging that Lynch's father and mother were depositing funds for Lynch in secret offshore bank accounts … ;

c. threatening Lynch that she would go to jail if she did not cooperate, and having her younger son's father, Steve Lindsay, who was also Cohen’s record producer, repeat these threats in the child's presence;

d. threatening to “go to child services,” encouraging Steve Lindsay to file legal action to remove Lynch’s younger (and his) son from her custody, and submitting affidavits (from Kory and Superfon) supporting that effort;

e. in a coordinated fashion with Lindsay’s child custody petition, encouraging or directing Steve Lindsay to call in a warning to the LAPD (not related to Traditional Holdings, but on some other, unknown pretext) that caused a police team to descend, guns drawn, on Lynch's home, resulting in her being handcuffed and taken involuntarily, in her bathing suit, to a hospital psychiatric ward and medicated without her consent, before being released the next day, during which time Kory attempted to persuade Lynch’s older son, Rutger, to sell Lynch’s house and provide $3 million; and

f. paying two paroled convicts to make [false] statements [about Lynch’s older son].

These and other tactics brought Lynch to the point of … financial ruin.

Cohen’s scheme to force Plaintiffs into a contrived mediation without discovery or publicity might have succeeded, had not Lynch refused to cooperate. Instead, she made the unilateral decision to provide to Plaintiffs' legal counsel a variety of documents and other information that they might not have otherwise seen … See, e.g., Facsimile Message from K. Lynch to S. Posel (March 17, 2005) (Exh. 11 attached).

Fortunately, Lynch [permitted Boies Schiller to review] not only historical files, but also the details of Cohen and Kory's illicit offers made to her through attorney DiMascio, through accountant Dale Burgess, and through other intermediaries, and shared every detail of Cohen and Kory's attempts to negotiate with or threaten her in order to obtain … testimony ...

Cohen and Kory continued to heighten their efforts to bribe or coerce Lynch into giving … testimony … without knowing that Lynch had already exposed their scheme …

Cohen and Kory alleged that Plaintiffs “proposed the sale of Cohen's ‘illiquid assets,’ including Cohen's various royalty interests,” and contended that “Cohen was convinced by [Greenberg] of the financial necessity to sell off his royalty interests during his lifetime . . . .”

Cohen and Kory alleged that Plaintiffs were liable for “actual damages of at least $8 million,” which was an amount even greater than the total proceeds of the Second Sony Sale. In fact, Cohen and Kory made this allegation with full knowledge that Cohen had already received at least $1 million in advance of the Sale closing, that the gross proceeds had been reduced by specific costs and charges, that were well over $1 million had been paid out to third parties to cover closing costs from the Sale, and that Cohen had received at least $2 million of the remainder into his own personal bank account.

Cohen reviewed the Traditional Holdings governing documents (detailing that arrangement), that he repeatedly received and understood both oral and written explanations of this very fact, and that [Lynch was not] behind the formation or structure of Traditional Holdings.

Thereafter, on June 3, 2005, Plaintiffs provided Kory, as promised, a draft complaint … with extensive documentary support … The draft complaint also revealed to Cohen and Kory, for the first time, that Lynch and others had already exposed the extortion scheme. In particular, the draft complaint demonstrated that Plaintiffs were aware of Cohen’s scheme to use economic compensation, emotional intimidation, and other forms of undue pressure to coerce Lynch to provide … testimony …

At all relevant time periods stated herein, Kory acted, at a minimum, as an agent, attorney, joint venturer, and/or co-conspirator of Cohen …

Cohen and Kory knew that the false, disparaging, and defamatory press release was not made in furtherance of any lawful objective or within the scope of the litigation commenced by Plaintiffs, and that the intended recipients were not involved in or closely connected with the litigation.

As a result of Cohen and Kory’s improper and unlawful conduct, the false, disparaging and defamatory press release was immediately published on, inter alia, the following interactive and other websites:

(a) www.leonardcohen.com (the official Leonard Cohen website, which has a link to the chat room for the Leonard Cohen files, where the statement was published);

(b) http://www.cmumusicnetwork.co.uk/daily/050616.html (states that “Kory told CMU” and then quotes the Cohen and Kory press release);

http://xrrf.blogspot.com/2005/06 leonard-cohen-mr.-big.html (referencing the quoted statement as “released by Leonard Cohen’s lawyer” and referring to it as the “Attorney Robert Kory Statement”);

(d) http://blogs.theage.com.au/malcontent/archives/2005/06/leonard_cohen_s.html (also referencing the quoted statement as “released by Leonard Cohen’s lawyer” and referring to it as the “Attorney Robert Kory Statement”; also later reported by MalContent to have been “emailed by
an industry rep to MalContent”); and

Leonard Cohen sued by investment company, alleging civil conspiracy, extortion
June 2005
Musician and legend Leonard Cohen is being sued by a Colorado investment company Agile Group, which alleges Cohen and another person threatened to irreparably damage Agile's reputation in order to extort millions of dollars from Agile and its insurer. The case is related to claim by Cohen that Agile bears responsibility for the alleged misappropriation of Cohen's invested funds by Cohen's former manager. Read it here.
Don's ask me why, but Cohen's classic, Everbody Knows comes to mind.
A statement released by Leonard Cohen's lawyer points to the truth of this sad state of affairs:
"The suit filed by the Agile Group Monday, June 6, 2005 is completely
consistent with Agile's reckless disregard for its client and his
We had hoped to reach an out-of-court settlement with Agile that
returned to Mr. Cohen some portion of the retirement money the firm was
authorized to administer on his behalf. Instead, in the middle of
negotiations to determine Agile's responsibilities to Mr. Cohen to
compensate him for money lost under their management, Agile launched a
surprise attack in an effort to besmirch the reputation of one of its
notable clients.
Agile repeatedly failed to alert Mr. Cohen to true account balances
while allowing improper and unauthorized withdrawals by Cohen's former
business manager. In doing so Agile failed to protect Mr. Cohen's
interests and retirement savings and knowingly misled him by providing
inaccurate financial reports.
We will of course file a counter suit that lays out in detail how Agile
acted in a reckless way that violated the firm's fiduciary
responsibilities towards Cohen and consequently resulted in the loss of
Mr. Cohen's retirement savings."
·         Posted by: Adrian du Plessis at June 14, 2005 08:07 PM

 (e) http://bcbr.datajoe.com/app/ecom/pub_print_article.php?id=58402 (the website for the Boulder County Business Report, published in Colorado, which references Kory’s posting of the statement on Cohen’s website, and re-publishes the statement).

181. In addition, Cohen made false, disparaging, and defamatory statements and republished
false, disparaging and defamatory e-mails to a reporter for an industry publication known as MacLeans, knowing that the statements would be immediately published by MacLeans to the general public via the internet and other print publications. The MacLeans article, published via the internet on August 17, 2005.  SEE ATTACHED.  [Excerpt:  Cohen wrote (Greenberg) in November 2004 … “Face up to it, Neal,” the email continues, “and square your shoulders:  You were the trusted guardian of my assets, and you let them slip away . . . Restore what you lost, and sleep well.” In his sign-off, Cohen delivered as much a piece of advice as his own philosophy: “Put this behind you and it will dissolve.”]

The wrongful conduct described herein was attended by circumstances of fraud, malice, willful and wanton behavior, and bad faith.

Consistent with their prior threats, Cohen and Kory have knowingly published or caused to be published false information concerning [Lynch and possibly others] in the public domain …

The false, disparaging, and defamatory press release and other statements are not protected by any statutory or common law privilege because the statements were not made in furtherance of any objective of litigation, either lawful or otherwise, and because the intended and actual recipients of the statements were not involved in or closely connected with the litigation.

The … statements, and other defamatory statements, were communicated to and understood by third parties to be defamatory, and have harmed [Lynch and possibly others] reputation in the community.

Cohen and other co-conspirators not currently named as Defendants herein (including Robert Kory, Steve Lindsay and Betsy Superfon) committed one or more unlawful acts in furtherance of these common goals and objectives.

The unlawful goals and objectives of the conspiracy included inter alia the following:  (a) The extortion and/or attempted extortion of money or property from Plaintiffs and their insurers [and others, including Lynch] in Colorado [and elsewhere] to recover alleged losses sustained by Cohen as the result of his own exorbitant spending habits, his own neglect and mismanagement of his financial, legal and personal affairs … The making of substantial threats, that were reasonably likely to induce [Lynch and possibly others] that the threats would be carried out, and would cause
significant economic hardship or damage to the reputation [of Lynch and possibly others] with the intent to induce [certain parties] to perform acts against their will; The offering of benefits [to properly compensate Lynch with respect to her ownership interest in numerous corporate entities; for services rendered; and so forth] to a witness and/or members of the witness’ family with the intent to influence the witness to testify falsely or unlawfully withhold truthful testimony; The use of threats, acts of harassment, or acts of harm or injury to persons [including Kelley Lynch] or property, directed to or committed upon a witness and/or members of the witness’ family to intentionally attempt and/or actually influence the witness to testify falsely or unlawfully withhold truthful testimony;  The intentional attempt to induce a witness to testify falsely or unlawfully
withhold truthful testimony; The generation and dissemination of a false, disparaging and defamatory press release and other similar statements to third persons with the knowledge, intent, and directive that such statements be disseminated by media publication and the internet throughout [the world].

Cohen’s conduct described herein was attended by circumstances of fraud, malice, and willful and wanton behavior.

Cohen and the other co-conspirators not currently named as Defendants herein (including Robert Kory, Steve Lindsay and Betsy Superfon) knowingly conducted or participated, directly or indirectly, in such enterprise through a “pattern of racketeering activity” … The acts of racketeering activity which Cohen and the unnamed co-conspirators, and the enterprise committed, attempted to commit, conspired to commit, solicited, coerced or intimidated others to commit included, inter alia: (a) Mail fraud;  (b) Wire fraud; (c) Interference with commerce by threats; (d) Criminal extortion; (e) Bribing a witness; (f) Intimidating a witness;  (g) Tampering with a witness.  [The witness is Kelley Lynch]

The predicate acts described herein formed a pattern of racketeering activity, were related to the conduct of the enterprise, and were related to each other as part of the common plan …

Cohen and his agents and attorneys have engaged, and are continuing to engage, in a continuous and relentless pattern of malicious and unwarranted conduct, as described more fully herein [and in Lynch’s legal documents in various related matters and elsewhere].

Judge Babcock’s December 5, 2005 order dismissing Robert Kory from this case [due to lack of personal jurisdiction] contains the following statements.  The tactics and purported thuggery Judge Babcock refers to are ongoing and ineffective:  They tried to compel Ms. Lynch to participate in their project by, among other tactics, having her arrested on false pretenses and initiating proceedings to deprive her of her children. The Amended Complaint does not indicate that this purported thuggery was effective.”

Only the above allegations or statements in Neal Greenberg’s Amended Complaint are factual. 

(D. Colo. Dec 05, 2005)
Decided December 5, 2005
GREENBERG ASSOCIATES. INC., d/b/a Agile Advisors, Inc. a Delaware corporation, TACTICAL ALLOCATION SERVICES, LLC, d/b/a Agile Allocation Services, LLC, a Delaware limited liability company, AGILE GROUP, LLC, a Delaware limited liability company, GREENBERG ASSOCIATES SECURITIES, INC., d/b/a Agile Group, a Delaware corporation, and NEAL R. GREENBERG, a Colorado resident, Plaintiffs, v. LEONARD COHEN, a Canadian citizen residing in California, ROBERT KORY, a United States citizen residing in California, KELLEY LYNCH, a United States citizen residing in California, and JOHN DOE, Numbers 1-25, Defendants.
Civil Case No. 05-cv-01233-LTB-MJW.
United States District Court, D. Colorado.
December 5, 2005

The defendant Robert Kory moves for dismissal of all claims against him on the alternate grounds that I have no personal jurisdiction over him, Fed.R.Civ.P. 12(b)(2), and that the plaintiffs have failed to state a claim against him, Fed.R.Civ.P. 12(b)(6). The motion is adequately briefed and oral arguments would not materially aid its resolution. For the reasons stated below, I find and conclude that I have no personal jurisdiction over Mr. Kory and I GRANT the motion pursuant to Rule 12(b)(2).

Because Mr. Kory has contested the Court's jurisdiction, the plaintiffs have "the burden of proving jurisdiction exists." Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). *22 "Where, as in the present case, there has been no evidentiary hearing, and the motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written material, the plaintiff need only make a prima facie showing that jurisdiction exists." Id.

In resolving factual questions:

The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. If the parties present conflicting affidavits, all factual disputes must be resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party. However, only the well-pled facts of plaintiff's complaint, as distinguished from mere conclusory allegations, must be accepted as true.
Id. (citations omitted).

I. Allegations The allegations of the Amended Complaint are substantially the following. In 1997, the defendant Leonard Cohen, a resident of California, retained the plaintiffs, directed by the plaintiff Neal Greenberg and headquartered in Boulder, Colorado, to create for him charitable trusts and to manage the assets placed into those trusts. (Throughout the Amended Complaint and their briefs, the plaintiffs refer to themselves individually and in the aggregate as "Greenberg." They do not reveal the nature of their relationships to each other. I have attempted to be as precise as the pleadings and the record will allow.) Mr. Cohen allegedly drew extravagant sums from the trusts, depleting the principal amounts and impeding the plaintiffs' efforts successfully to invest the funds in profitable ventures. The defendant Kelley Lynch, Mr. Cohen's manager, oversaw and had power of attorney over, all of Mr. Cohen's financial dealings. Mr. Greenberg allegedly repeatedly warned Ms. Lynch and Mr. Cohen that Mr. Cohen was spending too much and that, absent a change of habit, he would become destitute. *33 In October, 2004, Mr. Cohen and Ms. Lynch allegedly parted ways and began to issue competing directives to the plaintiffs. They each blamed the other for Mr. Cohen's financial distress. Mr. Cohen claimed that Ms. Lynch had deprived him of substantial sums of money. Thereafter, Mr. Cohen and Mr. Kory, Mr. Cohen's personal attorney and a California resident, allegedly conspired to extort the lost sums from the plaintiffs by tarnishing the plaintiffs' reputation, asserting spurious claims, and coercing a settlement from the plaintiffs' insurance carrier. This they intended to accomplish by using Mr. Cohen's fame as a prominent recording artist to publish defamatory statements about the plaintiffs to the press. They tried to compel Ms. Lynch to participate in their project by, among other tactics, having her arrested on false pretenses and initiating proceedings to deprive her of her children. The Amended Complaint does not indicate that this purported thuggery was effective.

Mr. Kory sent an allegedly defamatory demand letter to Mr. Greenberg's attorney, wrongly accusing the plaintiffs of fraud and various breaches of fiduciary duty. After the plaintiffs filed this lawsuit, Messrs. Cohen and Kory allegedly published defamatory statements on Mr. Cohen's web site, blaming the plaintiffs for the lost monies, asserting that the plaintiffs had wrongfully permitted Ms. Lynch to withdraw unauthorized sums, and asserting that the plaintiffs had provided Mr. Cohen with fraudulent accounting records. Mr. Cohen and Ms. Lynch now dispute entitlement to the funds remaining in the trusts. Each seeks immediate acquisition of the funds.
Mr. Kory allegedly submitted to the jurisdiction of this Court by his purposeful and repeated written and telephonic communications with the plaintiffs and his direction of Mr. Greenberg's activities, performed in Colorado. Additionally, Mr. Kory allegedly reserved a *44 conference room at the Denver International Airport and scheduled a meeting, which he, Mr. Greenberg, Mr. Cohen, and Mr. Greenberg's counsel were to attend. Messrs. Kory and Cohen allegedly failed to appear for the meeting, which Mr. Greenberg attended.
II. The record
A. Kory affidavit

Mr. Kory has provided two affidavits replete with refutations of the plaintiffs' jurisdictional allegations. He is licensed to practice law in California, where he resides and has his law practice. He last traveled to Colorado in 1985 or 1986 for a ski vacation. He has no business or property interests in Colorado.
In the fall of 2004, Mr. Cohen retained Mr. Kory to investigate suspected losses from an entity denominated Traditional Holdings, LLC ("Traditional"), which the plaintiff, Tactical Allocation Services, LLC ("Tactical") managed for Mr. Cohen under Mr. Greenberg's direction. In the ensuing weeks, Mr. Kory contacted Tactical's Boulder, Colorado office on two or three occasions. Tactical responded by sending information about Mr. Cohen's accounts to Mr. Kory in California. Thereafter, Mr. Kory communicated predominantly with Tactical's legal counsel, Sherab Posel, whom Mr. Kory believed to be resident in New York. Though he engaged in at least one email exchange with representatives of Tactical located in Boulder, Mr. Kory communicated Mr. Cohen's asserted legal claims against Tactical and related requests for information to Mr. Posel, who responded on letterhead imprinted with New York addresses.

In April, 2005, Mr. Kory and Mr. Posel scheduled a mediation for June 5, 2005, which was to occur in Colorado. Mr. Kory reserved a conference room at a hotel near the Denver airport in anticipation of that meeting. After Mr. Posel disputed the veracity of Mr. Cohen's *55 claims and threatened litigation, Mr. Kory cancelled the room reservation in Colorado and remained in California.
B. Barnett affidavit

Timothy Barnett, Tactical's Vice President who works in Boulder, has produced correspondence — emails and letters — between Mr. Kory and representatives of the plaintiffs in Colorado and New York. Numerous emails and letters between Mr. Kory and Mr. Barnett throughout the period beginning in November, 2004 and ending in June, 2005 addressed Mr. Kory's requests for information about the accounts that Tactical managed for Mr. Cohen and Tactical's efforts to comply with those requests. Contrary to Mr. Kory's assertion, these communications number in the dozens. Many of the communications indicate that copies were sent to Mr. Greenberg and Mr. Posel, among others. Emails exchanged on December 15 and 16, 2004 detailed plans for a conference call involving Messrs. Kory, Barnett, and Posel. The three set up another conference call in March, 2005. Other emails reference telephone calls between Mr. Kory and Mr. Barnett and calls and conversations between Mr. Kory and Mr. Posel.

In an April 10, 2005, twenty-seven page demand letter to Mr. Posel, Mr. Kory asserted claims against "the Agile Group, Neal Greenberg and his partners" on Mr. Cohen's behalf. Mr. Kory made repeated references to the "several telephone conversations and e-mails regarding" the claims that he and Mr. Posel had previously exchanged. He invited a further response from Mr. Posel. Thereafter, Mr. Kory and Mr. Barnett exchanged emails only discussing the scheduling of a mediation meeting for June 5, 2005. Mr. Posel and Mr. Kory continued to communicate in writing about Mr. Cohen's allegations. On June 4, 2005, Mr. Kory wrote to Mr. Posel by email cancelling the mediation, but making no reference to the lawsuit that the plaintiffs had purportedly *66threatened. In a June 9, 2005 email, Mr. Kory expressed surprise at the contents of a draft complaint that Mr. Posel had sent him the day before.

By letter on June 2, 2005, Mr. Kory sent to Mr. Barnett two checks for deposit in Mr. Cohen's accounts. On June 7, Mr. Barnett responded in writing, noting that Mr. Cohen had terminated his relationship with the plaintiffs.
III. Discussion
"To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment." Far West Capital, Inc. v. Towne,46 F.3d 1071, 1074 (10th Cir. 1995). Because, as set forth below, I conclude that the Colorado long-arm statute does not reach Mr. Kory, I need not consider the constitutional question. The plaintiffs argue that Mr. Kory has submitted to jurisdiction in Colorado by the "commission of a tortious act within this state." Colo. Rev. Stat. § 13-1-124(1)(b). Colorado courts have held that the tort provision of the long-arm statute may be satisfied either 1) when tortious conduct occurs in Colorado, or 2) when tortious conduct initiated in another state causes injury in Colorado. Wenz, 55 F.3d at 1507; Classic Auto Sales, Inc. v. Schocket, 832 P.2d 233, 235-236 (Colo. 1992).

The plaintiffs first argue that Mr. Kory committed tortious conduct in Colorado. Directing into Colorado communications by which a tort is committed constitutes conduct sufficient to satisfy the statute if the tort is completed by the plaintiff's receipt in Colorado of the communications. Id. at 236; Broadview Financial, Inc. v. Entech Management Services Corp., *77859 F. Supp. 444, 448 (D. Colo. 1994). However, merely communicating with a person resident in Colorado is, in itself, insufficient to bring a defendant within the reach of the Colorado statute. Archangel Diamond Corp. v. Lukoil, ___ P.3d ___, 2005 WL 3097588 (Colo. 2005).
Mr. Kory's several communications with Mr. Barnett concerned Mr. Kory's attempts to elicit information from Mr. Barnett that would prove useful to Mr. Cohen. Though the plaintiffs feel that Mr. Kory solicited their cooperation in bad faith — Mr. Kory used much of the information the plaintiffs provided to construct claims against them, even as he repeatedly commended them for their diligence — the gravamen of their claims against Mr. Kory is that he conspired to defame them and to extort money from them by asserting frivolous claims. Mr. Kory directed to Mr. Posel in New York, and not to Mr. Barnett in Colorado, the communications by which he allegedly accomplished those torts. The plaintiffs have not argued — nor does it appear from the record — that the exchange of information and documents between Mr. Kory and Mr. Barnett was tortious. Nor could the plaintiffs premise liability on Mr. Kory's later-reneged reservation of a conference room in Colorado. I am left to determine whether the plaintiffs have suffered an injury in Colorado as a result of Mr. Kory's allegedly tortious acts. Wenz,55 F.3d at 1507. Tortious-activity jurisdiction obtains under the statute when "the injury itself" occurs in Colorado. McAvoy v. District Court, 757 P.2d 633, 635 (Colo. 1988).

Further, the injury in the forum state must be direct, not consequential or remote, and loss of profits in the state of plaintiff's domicile is insufficient to sustain long-arm jurisdiction over a nonresident defendant. Hence, when both the tortious conduct and the injury occur in another state, the fact that plaintiff resides in Colorado and experiences some economic consequences here is insufficient to confer jurisdiction on a Colorado court.  Amax Potash Corp. v. Trans-Resources, Inc., 817 P.2d 598, 600 (Colo.Ct.App. 1991) (citations *88 omitted).

The plaintiffs argue that Mr. Kory directed the injurious consequences of his wrongful activity toward Colorado because they, who have an office here, were the intended recipients of the harm. They cite D D Fuller CATV Const., Inc. v. Pace,780 P.2d 520(Colo. 1989) for the proposition that Mr. Kory could, therefore, have reasonably anticipated being haled into court in Colorado. However, they have not addressed the prior question where the injury occurred. Nothing in the record, Mr. Barnett's correspondence from Colorado included, appears to demonstrate that the plaintiffs suffered an injury in Colorado. Indeed, the only business the plaintiffs are alleged to have lost was transacted with Mr. Cohen, who resides in California. Accordingly, it is ORDERED that

1) Robert Kory's motion to dismiss pursuant to Fed.R.Civ.P.12(b)(2) [13] is GRANTED; and
2) the plaintiffs' claims against Mr. Kory are dismissed.


August 17, 2005

A 'devastated' Leonard Cohen

The Canadian music icon is broke and the lawsuits are flying. It's a sordid tale involving allegations of extortion, SWAT teams, forcible confinement, tax troubles and betrayal.


I said there's been a flood
I said there's nothing left
-- Leonard Cohen, from The Letters, on his album Dear Heather

Take an iconic artist, mix in missing millions, hints of tantric sex, a lawsuit replete with other salacious details, and a ruptured relationship with a long-time, trusted associate, and you've got the makings of a Hollywood blockbuster. Except in the case of Leonard Cohen, it's a true tale, with the bizarre twist of a Tibetan Buddhist suing a Zen Buddhist, Cohen. For the 70-year-old poet, singer and songwriter, it's a nasty, rapidly escalating legal battle that on the one hand accuses him of conspiracy and extortion, and on the other has him accusing both his highly trusted personal manager and long-time financial adviser -- the Tibetan Buddhist -- of gross mismanagement of his financial affairs. The case exposes not only private details of Cohen's finances, but also a dramatic tale of betrayal. 

The conflict, which Cohen and others have tried to keep out of public view, has left him virtually broke -- he's had to take out a mortgage on his house to pay legal costs -- and facing a multi-million-dollar tax bill. But the artist, who is soon to release a new album with his collaborator -- and current girlfriend -- Anjani Thomas, is today remarkably calm about the potentially embarrassing conflict. Still, when he discovered last fall that his retirement funds, which he had thought amounted to more than $5 million (all figures U.S.), had been reduced to $150,000, he wasn't so sanguine. "I was devastated," Cohen says. "You know, God gave me a strong inner core, so I wasn't shattered. But I was deeply concerned."

So far, only one formal court filing involving Cohen has been made. In June, Boulder, Colo.-based Neal Greenberg, Cohen's investment adviser of almost a decade, launched a hyperbole-laden claim in Colorado against Cohen, who lives in both Los Angeles and Montreal. The suit accuses Kelley Lynch, who was Cohen's manager and is also named in the suit, of siphoning money from the songwriter. It also accuses Cohen and his lawyer Robert Kory of conspiracy, extortion and defamation. It alleges the two, in an attempt to recover at least some of Cohen's lost money, threatened to besmirch Greenberg's reputation and concocted a plan to force Greenberg to give Cohen millions of dollars.

The suit paints an almost preposterous picture of Cohen as an artist who led a lavish celebrity lifestyle and then turned bitter and vindictive when he discovered the money had run out. For example, the suit quotes Lynch describing how Cohen demanded she discuss business matters while he soaked in a bubble bath, and how later he was somehow involved in calling a SWAT team to her home, where she was handcuffed and forcibly taken to a psychiatric ward while in her bathing suit.

None of the allegations have been proven in court. Cohen is expected to file a countersuit this week. More lawsuits are likely to join the fray. And Lynch, who has sent turgid, raw and wrathful emails hither and yon, is threatening to sue just about everyone.

The conflict was triggered last fall when Cohen was tipped off by an insider that a lot of money was missing from his accounts. All that remained of his retirement savings was the $150,000, funds that today he can't get at as a result of the tangled legal web he finds himself in. Greenberg's suit portrays the soulful songwriter as an artist who paid little attention to his financial affairs and so was easily duped by a conniving personal manager. Cohen says he tried quietly, and confidentially, to find out from his various managers where the money had gone. Cohen calls the case "a tragedy," suggesting he was exploited by trusted advisers. He uses words like "greed, concealment, and reckless disregard," and says firmly he did nothing wrong. "I can assure you, within reason, I took every precaution except to question the fidelity of my closest associates."

Untoil Cohen fired her last fall, Kelley Lynch had been his personal manager for almost 17 years. Back in 1988, she'd been working as an assistant to his then-manager, who died that year. Because she was knowledgeable about Cohen's business affairs and recording contracts, he had her take over. Over the years, the two developed a personal and professional relationship. Fifteen years ago, they had a brief affair. "It was a casual sexual arrangement. It was mutually enjoyed and terminated," he says. "I never spent the night." The end of the affair didn't affect their bond. "We were very, very close friends," Cohen says today. "I liked her immensely. Our families were close -- she was helpful when I was raising my daughter; I employed her father." He even named her in his living will, giving her the power to decide, in certain circumstances, if he would live or die. He handed her vast powers of attorney. He trusted her implicitly. And he believed the relationship was mutual. "She wrote dozens of emails to me, thanking me for my help. We used to correspond regularly, relentlessly." He says that in 2004, while he was recording his most recent album, Dear Heather, with a small team at his home-recording studio, Lynch would come by almost daily. "People were very tight. Kelley was taking care of business, I was producing the album. It was all taking place in this little duplex and the garage that was converted into a studio. Kelley would come over, and I would generally prepare lunch for everyone."

The cosy arrangement was shattered one day last October when a young man, the boyfriend of a casual employee of Lynch, spoke to Cohen's daughter, Lorca, who owns an art deco furniture store and who lives downstairs from her father in the L.A. duplex he owns. "Your father really ought to look into his accounts, because he might be surprised at what he finds," he said. Lorca told him that her father trusted everyone involved and that besides, "he's about to retire, anyway." As Cohen senior tells the story, the young man replied, "He won't be able to retire."

Alarmed, Lorca called her father, who was in Montreal. Within a couple of days, he returned to Los Angeles and immediately went to his bank. There he discovered, as he puts it, "improprieties." Lynch had linked her American Express bill directly to his personal chequing account, he says, and just days before his visit to the bank, he'd paid a $75,000 Amex bill on her behalf. He never learned what purchases the card had been used for, but says the credit card company reimbursed him. Cohen immediately removed Lynch's signing powers on the accounts. The next day, Cohen told Lynch she no longer had access to the bank accounts and he fired her. That afternoon, Cohen says the bank notified him that Lynch went to a different branch and attempted to withdraw $40,000 from one of his accounts. He then called a lawyer and brought in a forensic accounting firm, Moss-Adams, which, in an investigation of all of Cohen's holdings, discovered "massive improprieties." In all, the accountants discovered about $8.4 million had over time disappeared from his holdings, Cohen says. His retirement funds had been virtually depleted.

Neal Greenberg, a banker with a thriving investment firm, had been brought in by Lynch to manage Cohen's money in 1996, two years after Cohen went up Mount Baldy to study to be a Rinzai Zen Buddhist monk. But now, he was worried. Over two decades, Greenberg had built a successful company, the Agile Group, and managed more than half-a-billion dollars of other people's money. He enjoyed, as he says in his suit, a "spotless professional reputation." And suddenly, here was Leonard Cohen, not just a prized client but one with a high profile, suggesting that Greenberg was party to the disappearance of Cohen's retirement savings.

Over the years, he says, he warned Cohen that his funds were being rapidly depleted, but it seemed the artist paid no heed. And now, Cohen and his lawyer, Kory, claims the Greenberg suit, were threatening "that Cohen would go out on tour to promote his new album and give interviews to reporters in which he would insinuate that he was touring because he had been bankrupted by improprieties by Greenberg and other financial advisers." Greenberg must have envisioned his business and his career in absolute tatters. He sued.

Greenberg's lawsuit lays out the business background to the dispute. Cohen's success as a singer and songwriter generated millions in royalties, the suit says, and in the 1990s, Lynch, as Cohen's trusted personal manager, began to investigate auctioning his intellectual properties, including copyrights to his song catalogue and continuing royalties for his songs. Lynch, along with a tax consultant named Richard Westin, arranged two deals for Cohen's properties. The transactions were eventually completed, one in 1997, the other in 2001, with Sony Music. From the first sale, about $5 million was transferred to trusts that Greenberg had been enlisted to manage and that would protect Cohen from an upfront tax hit. Greenberg says he invested the proceeds wisely, making lots of money for the trusts. But Greenberg also claims that Cohen's "consistent and prolific spending" to support "his extravagant 'celebrity' lifestyle" eroded the gains he had made on his client's behalf.

The second sale of Cohen's intellectual property, in 2001, was for $8 million. With Westin, Lynch put that money into a newly formed company named Traditional Holdings LLC that also was intended to shield Cohen's earnings from a major tax hit. Lynch was named as owner of 99.5 per cent of the company, leaving Cohen holding just 0.5 per cent. Greenberg alleges that Cohen, well aware of the structure and its dangers, signed off on it. Westin had explained to Cohen, the suit says, that "the plan would only work if Cohen and Lynch maintained (as they had in the past) a long-term relationship of personal and professional trust." Traditional Holdings could also issue loans to its owners, Lynch and Cohen.

As soon as the new company was in place, "Greenberg was immediately alarmed by Cohen's desire and tendency to treat this company [Traditional Holdings] like his personal piggy bank," the lawsuit alleges. It goes on to claim Cohen took a $1-million advance on the second sale of assets to Sony, Lynch took a commission of $1.1 million, and fees for lawyers and accountants ate up another $714,000. And then, over the next few years, Lynch regularly borrowed money from the Traditional Holdings account in amounts of tens of thousands of dollars, sometimes for herself, sometimes acting for Cohen. The lawsuit claims that while Greenberg sent a monthly email statement to Cohen, it was always Lynch who told Greenberg to release the loans.

The Greenberg suit claims Lynch, always acting as Cohen's agent, told Greenberg what to do regarding the funds. For instance, Lynch instructed Greenberg to send Cohen the monthly email status reports, but Greenberg says she directed him to leave out day-to-day activities and the status of Traditional Holdings loans. Because the loans were to be repaid, Greenberg included them in the statements as assets, which meant that it appeared as though nothing had been taken out.

Greenberg, who declined to comment for this article, claims in his suit he repeatedly stressed to Cohen that his spending was seriously draining his investments. In one warning letter, Greenberg told Cohen that Traditional Holdings had only $2.1 million left. Considering how quickly the money was leaving the account, Greenberg wrote, "I think you should consider your situation quite desperate." It's not clear if Cohen ever received this letter. On this, Cohen and Greenberg agree: they say many of Greenberg's attempted communications with Cohen were intercepted by Lynch.

On other points, Cohen disagrees. He was vitally interested in his financial affairs, he says. "It wasn't that I wasn't involved -- on the contrary, I took great pains to pay these professionals well and to solicit their advice and to follow it," he insists. "And, I was receiving a report every month from Neal Greenberg indicating that my retirement savings were safe." Cohen insists he was not made aware that Lynch had been named the majority owner of Traditional Holdings; instead, he says that in an early description of the company's structure, he had been told that his two children, Lorca and Adam, would be its principal owners. He says he was shocked to learn that Lynch had almost complete ownership. The mistake Cohen admits to is that "I paid close attention to everything except the possibility that my closest associate would embrace any irregularities in the discharge of her duties."

Cohen also says he learned only recently that the two sales of his intellectual property to Sony were unnecessary. He understands now that those properties earned roughly $400,000 a year, before taxes. That was plenty for him to support what he calls his modest lifestyle. Cohen accuses Lynch of creating the deals in order to boost her own income. He paid her 15 per cent of his income, which generally earned her $90,000 a year, he says. With the sales of his intellectual property bringing in revenue in the millions, it boosted her income to seven figures.

Greenberg's lawsuit becomes more disturbing as it describes what happened after Cohen realized he'd lost millions of dollars. Greenberg says Cohen pressured him to go after his firm's insurance company for the money to repay him. "Be a man," Cohen told Greenberg, the suit says. By threatening his reputation, it appeared to Greenberg that Cohen, on Kory's advice, had decided to target Greenberg's and his insurance company's deep pockets. Then, alleges the lawsuit, Cohen and Kory began to pressure Lynch to join them in "their extortion scheme." From November 2004 to April 2005, the lawsuit says, Kory repeatedly let Lynch know, sometimes directly, sometimes through friends or other intermediaries, that Cohen was ready to "forgive" Lynch's obligations to him, and that she in fact could receive a hefty cut of "whatever funds could be extorted from Greenberg and other advisers with her co-operation."

Greenberg's suit alleges that when Lynch refused to participate, Kory and Cohen vowed to "crush her." It goes on to say their "tactics to terrorize, silence, or disparage Lynch" included threatening her that she would go to jail, and "paying two paroled convicts to make statements that they had observed Lynch's older son brandishing a gun and threatening to kill someone."

Lynch's response, to all of this has been bitter, scattered and in some cases difficult to comprehend. In a rambling exchange of emails with Maclean's last week, she denied any wrongdoing. She also declined to discuss the Agile Group's lawsuit, describing it as "bogus" and "slanderous," while promising to file her own complaints against Cohen and other principal players in the case. She added her phone had been disconnected because she lacked money to pay the bills.

In the meantime, she's been showering Cohen and others with invective-laden emails that alternately voice misery and hurl accusations at friends and former colleagues. Many of these lament losing custody of her 12-year-old son, Ray, to his father, music producer Steve Lindsay. A few devolve into the outrightly bizarre. One missive, sent July 17 and obtained by Maclean's, invites Greenberg in highly explicit terms to Lynch's home for an evening of tantric sex. "First I want to study the inner channels with you," it says. "Why not -- let's see who is better at tantric sex -- you or me."

So troubling have the messages become that several people who know Lynch fear she's become unhinged. "I'm afraid she's suicidal," says Lindsay, her ex-husband, adding that in his judgment she's been acting erratically for the better part of a year. Cohen too sent Lynch a message last fall spelling out his concern in verse: You can't tell the difference between a threat / and a helping hand, he wrote. You can't tell the difference between a threat / and a solemn warning / from one of the few people / who still cares about you and your family.

Lynch's apparent troubles have had punishing legal consequences. Lindsay has obtained a temporary restraining order that prevents her from visiting her son. Tara Cooper, a former employee of a greeting card company Lynch started while still in Cohen's employ, has taken out a similar order after alleging that Lynch sent threatening emails and harassed her by phone. And two of her creditors -- upscale department stores Neiman Marcus and Bergdorf Goodman -- have filed collections claims against her in Los Angeles Superior Court.

This is the mess that Leonard Cohen -- a man many believe floats a few inches above the ground -- finds himself in. These days, he's Zen-like. In the course of a long interview by phone from his home in Los Angeles, the man sometimes called the poet laureate of pessimism sounded almost bemused. "What can I do?" he asks. "I had to go to work. I have no money left. I'm not saying it's bad; I have enough of an understanding of the way the world works to understand that these things happen."

His first choice of action when he learned his money was gone, he says, was to not do anything. Aware of how painful litigation could be, he says he wanted no part of it. "I said, 'I can walk away with nothing.' I said, 'Let me start again. Let me start fresh at 70. I can cobble together a little nest egg again.' " But he ran into a glaring, immediate problem: had he done nothing, he would have legally been responsible for the funds that had gone missing. And on that money, he'd owe millions in taxes, a sum he no longer had.

His next step, "his second-best choice," was to negotiate with his advisers about the missing money. He approached Lynch, asking her to open her books. "She resolutely and unconditionally refused to open her books to any scrutiny whatsoever and instead began a bizarre email campaign to discredit me in some kind of way, which has gone all over the place," Cohen says, adding that he's launching a lawsuit this week with great reluctance. "I don't want anybody hurt. It's not my nature to pursue and to contend with people that way." Cohen says all he wants is to find out where the money went. "I'm not accusing her of theft," he says of Lynch. Still, his countersuit will likely describe how money was removed from his accounts.

Cohen appears to have been blindsided by Greenberg's lawsuit. He insists that he and Kory were in the midst of mediation with Greenberg when the financial adviser's lawsuit was suddenly and unexpectedly filed. He says the mediation had been confidential, at Greenberg's urging, as he feared for his reputation. In an email to Greenberg, Cohen urges him to make good. "Dear Neal, I believed in you. I depended on you," Cohen wrote in November 2004. "When things went wrong, does it make any sense that you would make your warnings available to the only person in the cosmos who had an interest in deceiving me? A single, simple email informing me that my accounts were being emptied would have been enough. I answered EVERY SINGLE EMAIL you ever sent me. Fortunately, I have them all.

"Face up to it, Neal," the email continues, "and square your shoulders: You were the trusted guardian of my assets, and you let them slip away . . . Restore what you lost, and sleep well." In his sign-off, Cohen delivered as much a piece of advice as his own philosophy: "Put this behind you and it will dissolve." There's an irony here, that a man who has struggled much of his life to distance himself from the material world now, at 70, finds himself in an intense battle with it. Still, he's not defeated. "This has propelled us into incessant work," he says of himself and Thomas. He exudes optimism about their new CD. "It's one of the best albums I've heard." It's not closing time quite yet. 




Civil Action No. 05-CV-01233-LTB-MJW
GREENBERG & ASSOCIATES, INC., d/b/a Agile Advisors, Inc., a Delaware corporation;
TACTICAL ALLOCATION SERVICES, LLC, d/b/a/ Agile Allocation Services, LLC, a
Delaware limited liability company; AGILE GROUP, LLC, a Delaware limited liability
company; GREENBERG & ASSOCIATES SECURITIES, INC., d/b/a/ Agile Group, a Delaware
corporation; and NEAL R. GREENBERG, a Colorado resident,
LEONARD COHEN, a Canadian citizen residing in California; ROBERT KORY, a United
States citizen residing in California; KELLEY LYNCH, a United States citizen residing in
California and JOHN DOE, Nos. 1-25,


I, Joel A. Feuer, declare:

1. I am an attorney licensed to practice law in the State of California and a member
of the bar of the United States District Court for the Central District of California. I am a partner
in the firm of Gibson, Dunn & Crutcher LLP, counsel for Petitioner Leonard Norman Cohen. I
make this declaration in support of Cohen's Petition For An Order Compelling Arbitration and
his Motion to Compel Arbitration. The facts stated in this declaration are from my personal
knowledge, and if called as a witness, I would and could testify competently thereto.

2. Attached as Exhibit A is the Statement of Claim for Damages filed by Cohen
against the Agile Group with the NASD Dispute Resolution ("NASD").

3. Attached as Exhibit B is the definition of "associated person" used by the NASD
in connection with its rules and found at www.nasd.com (glossary of terms).

4. Attached as Exhibit C are selected pages from the Agile Group's website,
www.agilefunds.com, showing the Agile Group's organization, its structure and employees. The
website shows that the members of the Agile Group are known collectively as the Agile Group
and that all of the employees appear to work for each of the members of the Agile Group. The
members of the Agile Group also share the same contact information.

5. Attached as Exhibit D is a copy of relevant pages from Form ADV filed by
Tactical Allocation Services with the Securities Exchange Commission.
6. Attached as Exhibit E are copies of the following Rules from the NASD Manual:
10301(a); 10101; 0120(g); and 2270(b). These Rules are available from the NASD's website,

7. Attached as Exhibit F is a copy of an affidavit of Neal R. Greenberg filed in the
Agile Group's action against Cohen pending in the United States District Court in Colorado in
which Mr. Greenberg admits that he is a principal of each of the members of the Agile Group
(paragraph 2) and that Greenberg & Associates Securities, Inc. is a member of the NASD
(paragraph 12).

8. Attached as Exhibit G is a copy of an email from Neal R. Greenberg to Leonard
Cohen, dated June 18, 2002. Note that the email address is gagile.com, which is the address
used on the many emails sent to and from the members of the Agile Group to Cohen.

9. Attached as Exhibit H is an undated memorandum addressed to Leonard
Cohen/K. Lynch on the letterhead of Greenberg & Associates Securities, Inc. Portions of the
memo and other attached documents have been redacted because the memo reflects personal
financial information.

10. Attached as Exhibit I are copies of the portions of the NASD membership lists
under "A" showing that "Agile Group" is a member and copies of the lists under "G" showing
that Greenberg & Associates Securities, Inc. is not listed as a member. In other words, although
Greenberg & Associates Securities, Inc. is the member, it uses its dba "Agile Group," the group
name for all of the members of the Agile Group, as the membership name for the NASD. These
lists are available on line from the NASD website.

11. Attached as Exhibit J is a facsimile transmission cover page, dated 12-3-96 on
Greenberg & Associates Securities, Inc. letterhead followed by 15 pages of advice on plain paper
that does not identify which of the members of the Agile Group provided the advice. Portions of
the advice have been redacted because it reflects personal financial information.

12. Attached as Exhibit K is a letter dated Dec. 11, 1997 on the letterhead of Tactical
Allocation Services, LLC addressed to Leonard Cohen. At the bottom of the TAS letter, it states
that securities offered by Greenberg & Associates Securities, Inc.

13. Attached as Exhibit L is a letter dated November 12, 2004 addressed to Leonard
Cohen on the letterhead of Agile Group. At the bottom of the letter is a list of all of the members
of the Agile Group by their "d/b/a's", Agile Advisors, Inc., Agile Allocation Services LLC and
Agile Group LLC which comprise the Agile Group.

14. Attached as Exhibit M is a copy of the Investment Agreement between
Respondent Tactical Allocation Services, LLC d/b/a Agile Allocation Services LLC and Cohen
that contains an arbitration clause providing for arbitration of all disputes between TAS and
Case 1:05-cv-01233-LTB Document 40 Filed 10/11/05 USDC Colorado Page 3 of 5
Cohen "with respect to the relationship between TAS and Client [Cohen] to be held ... in
accordance with the rules in effect of the NASD...."

15. Attached as Exhibit N is a copy of the Declaration of Neal R. Greenberg filed in
the United States District Court for the Central District of California.

16. Attached as Exhibit O are copies of two purported agreements between TAS and
Cohen and Kelly Lynch that the Agile Group contend control the issue of arbitration. The
signature block for Cohen is blank. The Agile Group produced copies of these two agreements.

17. Attached as Exhibit P is copy of an Investment Agreement between TAS and
Cohen that provides for arbitration before the NASD in Los Angeles. The Agile Group has
indicated that it does not want to arbitrate in Los Angeles and Cohen is only requesting that the
parties arbitrate before the NASD.

I declare under penalty of perjury under the laws of the United States that the foregoing is
true and correct. Executed this 11th day of October, 2005 at Los Angeles, California.
s/Joel A. Feuer

I hereby certify that on October 11, 2005, I electronically filed the foregoing
COHEN'S MOTION TO COMPEL ARBITRATION with the Clerk of the Court using the
CM/ECF system which will send notification of such filing to the following e-mail addresses:
Randall Livingston livingston@b-p-law.com
David Chapman dchapman@bhf-law.com
Meghan Martinez mmartinez@bhf-law.com
s/S. Ashlie Beringer
S. Ashlie Beringer
1801 California Street, Suite 4200
Denver, CO 80202-2642
Telephone: (303) 298-5700
Attorneys for Defendant Leonard Cohen
Case 1:05-cv-01233-LTB Document 40 Filed 10/11/05


Robert Hilburn Interview w/Leonard Cohen
September 24, 1996

Copyright 1995/The Times Mirror Company Los Angeles Times Sunday, September 24, 1995

Telling It on the Mountain

Although Leonard Cohen has retreated to a Zen center to write music and poetry, a tribute album being released this week could bring new fans.

Like a bird on a wire
Like a drunk in a midnight choir
I have tried in my way to be free.
--Lyrics by Leonard Cohen

It's hard to imagine being startled in a setting as peaceful as the Zen Center on the edge of the tiny resort village of Mount Baldy, but that's the likely reaction when you discover that one of the most respected songwriters of the modern pop era lives on the center grounds in a cabin no larger than a budget motel room.
Leonard Cohen has spoken for years about his interest in Zen. But who ever figured that this pop icon, whose classic tales of restless longing include "Bird on a Wire" and "Suzanne," would make such a spartan spot his permanent home and would trade in his finely tailored suits for modest robes?
"They have been very kind to me here," Cohen says matter-of-factly about his change of lifestyle as he sits on a narrow cot that would look at home in an Army barracks. "This was originally two cabins, but they broke through [the wall] and made it one cabin to give me a bit more room.
"I stay here and do my work and help look after Roshi, who is the old teacher. He's 88, and three or four of us are charged with doing that. Cooking is my contribution."
The 61-year-old songwriter and poet hasn't turned his back on the world. He frequently heads down the mountain to Los Angeles in his four-wheel-drive vehicle, either to visit an affiliated Zen center, to visit his daughter in the Mid-Wilshire area or meet with Kelley Lynch, his manager.
But this two-room cabin has been home for two years for Cohen, who hasn't toured since 1993 or recorded a studio album since 1992. The cabin is where he rises at 3 each morning to begin preparing the day's first meal.
"Please stay for lunch," he says warmly. "I've made some lovely vegetable soup for today."
Cohen's graceful, confessional songs--described as "elegant, bittersweet mood music for the dark nights of the soul" in the latest edition of the Rolling Stone Album Guide--have had a major impact on a wide range of rock, country and pop musicians.
The reason he is accepting a visitor today is to talk about the tribute album that will be released Tuesday by A&M Records ( see review, Page 90 ). The collection, titled "Tower of Song: The Songs of Leonard Cohen," features versions of his works by such artists as Bono of U2, Peter Gabriel, Elton John, Willie Nelson, Sting, Billy Joel, Aaron Neville, Tori Amos and Trisha Yearwood.
The gracious, soft-spoken songwriter is delighted with the collection.
"I have had a good following in Europe and Canada, but I felt my position on the pop landscape in America was getting smaller and smaller until I kind of disappeared from view on the pop scene for about 10 years--say, 1975 to 1985," he says.
"But things started to change. My daughter [in her teens at the time] pointed out a few years ago that her friends were listening to my music, and that pleased me. People used to say my music was too difficult or too obscure, and I never set out to be difficult or obscure. I just set out to write what I felt as honestly as I could, and I am delighted when other people feel a part of themselves in the music."
Cohen was a late starter in the pop world. Born to a well-to-do couple in Montreal, he grew up in a house that was filled with music. As he got older, he enjoyed a wide range of musical styles, from commercial country and folk to synagogue music.
Inspired by the songwriting of Hank Williams and other Nashville heroes, Cohen was in a country group, the Buckskin Boys, briefly during his teens.
While a student at McGill University in Montreal, he gravitated toward poetry and prose, eventually gaining acclaim in Canada for his poems and two novels. But the books didn't sell well, and he turned to his first love--songwriting--in hopes of making some money.
He was quickly rewarded when Judy Collins recorded one of his songs, "Suzanne," for her "In My Life" album in 1966. The song became a staple of her live show and is still strongly identified with her.
Although Cohen had planned to simply write songs, John Hammond, the legendary Columbia Records executive who signed artists ranging from Bob Dylan to Billie Holiday, was so impressed by Cohen's own versions of his songs that he signed him to a record contract.
Cohen's debut album, 1968's "Songs of Leonard Cohen," contained some of his most memorable compositions, including "Suzanne," "Sisters of Mercy" and "Hey, That's No Way to Say Goodbye." Sales were modest, but critics and other songwriters hailed the collection. One fan, Robert Altman, even used it as the background score to his film "McCabe and Mrs. Miller."
While Cohen was frequently written about in the context of the New York folk movement, he stood apart in several ways. Cohen was in his 30s by the time his first album came out, and he favored expensive suits rather than blue jeans and work shirts. He also didn't share the movement's interest in left-wing or radical politics. He preferred to concentrate on themes of loneliness and desire.
"I grew up wearing suits," he says. "I wasn't trying to make a statement or set myself apart. I was never into blue jeans. I was older. I wasn't ashamed of my education. I didn't pretend that I came out of the country. I wasn't trying to be Paul Bunyan. My name was Leonard Cohen. My father was a clothing manufacturer. I wrote books. I went to college."
Cohen doesn't answer so quickly when asked why his music seemed so relentlessly stark and revealing--characterized by such lines as these from "Sisters of Mercy":
You who must leave everything
That you cannot control
It begins with your family
But soon it comes round to your soul.
"It was all I could write about," he says finally, rubbing his shaved head as if trying to stimulate thought. "You have to dig down for that true voice, which you've heard in others--a Billie Holiday or a Hank Williams--and you try to find it in your music. It's a way of proving you deserve to be here. . . . You deserve to get a girl or deserve to walk out on the street.
"I know this is a very poverty-stricken view of things, but that's the way it was. I never had the luxury of standing in front of a buffet table saying, 'I'll write this kind of song today and that kind tomorrow.' It was like: 'Can I scrape some words together and write anything? . . . Can I dig deep enough inside to say something that matters?'"
So how did Cohen get to the Zen Center?
"I was never interested in Buddhism," he says later, leaving his cabin and heading to a larger building where he does most of his cooking. "I was never looking for a new religion. The religion I had was fine as far as I was concerned, but this particular kind of training interested me. I have been studying with this old teacher, who happens to be a Zen master."
At the main cabin, he takes off his sandals and steps into the kitchen to test the soup that's heating on the stove.
Cohen began his embrace with Zen in the early '70s, during a period of deep depression.
"It's the same thing that happens to lots of people," he says after sampling the soup. "You don't do anything [to help yourself] unless you are in trouble. I got into a bit of trouble myself, and I noticed a friend from Greece seemed to have a much calmer life than mine. I had done a couple of records by then and done a tour of Europe. I had made a little money, but I was very lonely and dissatisfied. So, I phoned up my friend and he introduced me to this old teacher.
"There was something very intriguing about the Zen training. It was very rigorous. We were like the Marines of the spiritual world, and I enjoyed that. But after a while, I thought, 'This is crazy,' and I went over the wall.
"Yet something had touched me, and I started coming back here from time to time. It became integrated into the rest of my life, my songwriting, my touring, my duties to my family. As events in my life allowed it, I began spending more and more time until I just moved in."
Cohen gazes across the room, at the trees through the window, when asked about the fulfillment he receives at the center.
"I think finally it is the freedom from questions like 'What is life? Why are we here?' This is the study of the self--your relationship to this entity that we call the self. One of the things that appealed to me about this particular [discipline] is that they don't demand an answer."
On this afternoon, Cohen is making plans to accompany Roshi on a tour of Zen locales on the East Coast. "You might say I'm the road manager of the tour," he says, smiling at his joke.
"I have done this type of trip before. Sometimes people recognize me at airports, but the people at the centers are used to me taking Roshi around for many, many years, and it's no big deal. Besides, there are other people at the centers who have distinguished careers."
An outsider might interpret Cohen's decision to live in a Zen center as akin to dropping out of society, but Cohen objects.
"This is the very contrary of dropping out," he says. "Most people can't wait to get home to their house or apartment and shut that door and turn on the TV. To me, that's dropping out. There is a saying: 'Like pebbles in a bag, the monks polish each other.' You are continually involved with people here in a way you are never involved [on the outside]. You wake up with it and you go to sleep with it. There is this community. Any tendency toward dropping out is immediately spotted in a community like this."
Cohen has plenty of time here to devote to his writing. At present, he's working on an illustrated book of poems and songs for a future album. His workroom contains a primitive Macintosh computer and a synthesizer, tools for his music and his graphic art. There is also a radio in the room but no CD or cassette player. He has to go out to his vehicle to play a CD.
Though he has a daughter, Lorca, 21, and a son, Adam, 23, Cohen has never been married. He was engaged for a while to actress Rebecca De Mornay, but that relationship has ended.
"I've never felt myself as a civilian," he says when asked about relationships. "This kind of life suits me. I tried domestic life. I did my best. I had a good relationship with the mother of my children and my children, but I never felt I was any good at it."
Cohen finishes eating his soup and carries the bowl over to the sink. He puts on his sandals and then leads his guest back across the dirt trail to the parking lot.
He pauses at the car to answer a final question--whether he plans to tour if the response to the tribute album suggests there is a big U.S. audience to hear his songs again.
"Well, you know, the devil laughs when we make plans," he says. "I wouldn't want to say never, but I'm not waiting for the phone to ring."


March 6, 2002 – Draft

See KL notes to Richard Westin
and Cohen comnments.  Faxed to RW.

Dear Leonard,

I have now reviewed all the documents that were forwarded me in order to prepare the Traditional Holdings return. I would like to point out that I did not notice any sloppy record keeping and all the documents were delivered to me in a timely manner.

I would like to review the structure of TH at this time because it is ornate you may need further clarification. I will start at the beginning. TH came about as the result of Neal and myself being approached by Kelley at your request to search for a tax structure that would benefit you with respect to the Sony royalty buyout.  At that time, you were looking at ordinary income that would have been taxed at the rate of 47%. Traditional Holdings purchased your royalty buy-out properties using a private annuity. A private annuity is a contract under which a person sells property in exchange for deferred payments that end when the seller dies. The deferred payments are payments to you (which I will address later in this letter) and it is these deferred payments that allow the tax to be deferred. The payments cease upon your death. Private annuities have been around for decades and are not controversial.

In the year 2011, you will begin receiving about $38,000 a month for the remainder of your life. You will then pay taxes yearly on this amount at whatever the tax rate is on ordinary income.

You have therefore saved tremendously in taxes because you avoided the ordinary income tax of approximately $3.5 million in the year of the sale and will pay taxes as you receive your deferred payments. In the interim, your money is invested and if well managed it is also growing.

All monies you take from TH until 2011 need to be documented as loans. This is why some confusion arose for Kelley in the year 2001 with respect to your personal tax return payment. Neal made the decision that the funds should come from TH and Kelley then contacted me in order to determine what paperwork, if any, was required. I had to prepare a note that was to be placed in the file with a copy of the return. It is important to have these “loans” documented by notes.

RW will prepare all loan documents.  He is also handling matters related to the Sony 1099.  RW and KC will discuss who will prepare the LCI and BMT returns. 

To reiterate, TH obtained the properties with a private annuity in order to defer taxes. Kelley had to be brought in, and agreed to do so in order to help you, because you need a third party’s involvement so that this transaction is not viewed as your selling something to yourself. The third party should not be a relative of yours therefore Kelley was selected. We had Kelley sign a promissory note in the amount of $245,000 to TH which shows that she invested in TH. She
is to receive $24,000 a year for the first 17 years, then $31,250 a year, which allows her to repay the note; and, $20,000 a year which allows her to pay taxes on the amount she has received.

It complicates things for Kelley and possibly eats into her lifetime gift tax exemption that would benefit her children.

RW – advised that the promissory note payments total $44,000/year.  Addressed in corporate books and management agreement.  Cohen, RW, and NG have discussed the profits to be allotted to me and this will be addressed in writing.  Indemnity Agreement should be placed in corporate file. 

It is possible that estate taxes will change in the future and Kelley will not suffer any penalties. To summarize, Kelley was brought into this situation in order to help you accomplish a beneficial tax structure.

Leonard asked if I would be responsible for payments on the promissory note in the event he died.  Westin said no.

At this time, Kelley needs to begin repaying the note to TH. She must pay $24,000 debt service on the note this year so that the entity remains legitimate.  The way we anticipated handling this was to allocate $240,000/year of TH profits to Kelley each year which allows her to pay the taxes on the income that has created for Kelley.

RW will advise KL how taxes will be handled on thos $240,000/year allocation.  He will prepare all necessary tax documents. 

Unfortunately, because Kelley did not make the $24,000 payment in 2001 (she was not aware that she had to do so), this may create hardship for her with respect to taxes. In order to resolve this situation, I propose that Kelley be allocated the sum of $___________________ for the years 2001 and 2002. Out of this amount, Kelley will pay the note (by writing a check to TH) and pay the taxes she incurs by receiving these monies from TH, which we will call a fee for
the sake of simplicity.

It is often the case that once a structure has been established and taken out of the realm of theory, it takes time for all parties to understand what its function is and how it operates. I have basically raised three points here: (1) that a private annuity has been established in order to defer taxes; (2) you will eventually begin receiving monthly payments and until that time, all withdrawals from TH need to be documented as loans; (3) Kelley’s participation was essential and requires a yearly payment to her which allows her to repay the note and the taxes she incurs because of the payment.

On a separate note, I am giving some thought to your gift tax situation. I understand that you are giving Adam approximately $42,000 a year in support.  This cancels out the possibility of gift him $11,000 a year (which is now the yearly gift amount) with respect to the property you have purchased. I also understand that Anjani Thomas has been given sums possibly in excess of
$11,000 permitted yearly gift and need to rethink how the loan to her for the house should be handled.

LC asked RW to address gifts to Lorca – including mortage payment he makes on the Melrose property.  Chudd’s firm advised that Cohen should have a lease with Lorca - $55/sq. foot.  Cohen decided against this.

I would like to take some time and review the larger picture of your gifts with Kelley - this would include your voluntary monthly gift to the children’s mother which comes to $45,600 per year.

Kelley has advised me that you would like to know if there is some way for you to give gifts to your children in a manner that does not create a gift tax. This is something Reeve Chudd and I need to think through.

Since my involvement in your tax planning, several entities have been created: two charitable remainder trusts (which I understand Neal will address with you separately), and Traditional Holdings. These three entities - the two charitable remainder trusts and TH are really the essence of your tax and estate planning.

Last year was a very complex year but going forward everything should be quite
smooth and uncomplicated.
Cohen asked Westin if I could be compensated with 15% of LCI (as was the case with BMT). Westin advised that I should have been.

Westin advised us that TH bypasses Cohen’s estate.  The only entity assigned to Cohen’s revocable family trust (probate) is LCI. 

Followed up with Greenberg on memo he is preparing re. charitable remainder trusts.  He will speak directly to RW re. Cohen’s withdrawals from those accounts.