From: Kelley Lynch <kelley.lynch.2010@gmail.com>
Date: Wed, Oct 8, 2014 at 11:42 AM
Subject: Lynch-Cohen
To: poselaw@gmail.com, dan@lewisscheid.com, "irs.commissioner" <irs.commissioner@irs.gov>, Washington Field <washington.field@ic.fbi.gov>, ASKDOJ <ASKDOJ@usdoj.gov>, MollyHale <MollyHale@ucia.gov>, nsapao <nsapao@nsa.gov>, fsb <fsb@fsb.ru>, "Doug.Davis" <Doug.Davis@ftb.ca.gov>, Dennis <Dennis@riordan-horgan.com>, rbyucaipa <rbyucaipa@yahoo.com>, khuvane <khuvane@caa.com>, blourd <blourd@caa.com>, Robert MacMillan <robert.macmillan@gmail.com>, moseszzz <moseszzz@mztv.com>, a <anderson.cooper@cnn.com>, wennermedia <wennermedia@gmail.com>, Mick Brown <mick.brown@telegraph.co.uk>, woodwardb <woodwardb@washpost.com>, "glenn.greenwald" <glenn.greenwald@firstlook.org>, lrohter <lrohter@nytimes.com>, Harriet Ryan <harriet.ryan@latimes.com>, "hailey.branson" <hailey.branson@latimes.com>, "stan.garnett" <stan.garnett@gmail.com>, sedelman <sedelman@gibsondunn.com>, JFeuer <JFeuer@gibsondunn.com>, "kevin.prins" <kevin.prins@ryan.com>, rwest0@gmx.com
Norman Posel, Dan Scheid, and Richard Westin,
(c) http://xrrf.blogspot.com/2005/
I am filing a motion in the Leonard Cohen/Kelley Lynch matter in Los Angeles. I am attaching a schedule that addresses the allegations and statements in Greenberg's Amended Complaint that I agree with. I find all others to be his defense and self-serving. The tactics and thuggery continue. Given the fact that you raised allegations that Cohen planned to use restraining orders to undermine my credibility and prevent me from successfully serving as a witness, I would like to ask you to maintain the evidence supporting those allegations.
Dan, you confirmed that you have evidence that Cohen, Kory, Lindsey, and Superfon engaged in witness tampering, etc. I have spoken to the FBI about this evidence and provided IRS and others with a copy of your email. Please continue to maintain that evidence.
Leonard Cohen has replaced all corporate books and records, tax returns, etc. with a fraudulent and fictitious narrative. His loans and expenses total approximately $6.7 million from Traditional Holdings alone. I agree with Greenberg: these are Cohen's personal expenses and no one burdened the sales with these fees other than Leonard Cohen. He is the individual that demanded these deals. He demanded the complex stock transactions. And, he continues to blame his wrong-doing on others.
I am providing a signed copy of this document to IRS, FBI, DOJ, and FTB.
Kelley Lynch
SCHEDULE OF
FACTUAL ALLEGATIONS & STATEMENTS
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 statements taken directly from his Amended Complaint.
Dated: 8 October 2014
______________________________
Kelley Lynch
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. Plus $355,000 Promissory Note proving Cohen owes an additional $355,000 to Traditional Holdings, LLC. TOTAL: $6,626.518.00 and 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 Betzer 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.]
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 … 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,” to make good on Lynch's shares of IP rights or legal entities …
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.
(c) http://xrrf.blogspot.com/2005/
(d) http://blogs.theage.com.au/
an industry rep to MalContent”); and
(e) http://bcbr.datajoe.com/app/
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 purported thuggery Judge Babcock refers to is 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.”
