From: Kelley Lynch <kelley.lynch.2010@gmail.com>
Date: Mon, Dec 8, 2014 at 12:16 PM
Subject: Traditional Holdings, LLC, Cohen's Loans, Federal & State Tax Returns (2004 and 2005)
To: Jeffrey Korn cc: IRS, FBI, DOJ, FTB
Jeffrey,
When the State of Kentucky responded to me, and you (IRS, FBI, DOJ, and others) were copied in, they raised some interesting points. The State of Kentucky noted that Traditional Holdings, LLC has been inactive for 10 years but that's not accurate. Please see the tax returns that were filed for the years 2001, 2002, and 2003. The State of Kentucky also noted that their email to me was based on the theory that this entity is inactive. However, they noted that if the company was active, or organized, in the years 2005 forward it would be a different situation. The State of Kentucky also clarified that my ownership interest in that entity has not been "rectified" and I view that situation as highly problematic. Their position now differs from LA Superior Court's judgment and, I will point out, that TH did not have minimal ties to California so I have no idea where LA Superior Court obtained its jurisdiction. That is an outstanding legal issue.
The default judgment was entered in May 2006. I was not served and that judgment is void which will be addressed with LA Superior Court and in a federal lawsuit I intend to file. I am waiting for IRS written confirmation that they have instructed Cohen to provide me with IRS required form 1099 for the year 2004. I do have IRS transcripts for 2004 and 2005 and IRS does not show anything from Cohen on my account. It does show K-1s from LCI for the years 2004 and 2005 indicating I am a partner who had $0 income for those years. I have repeatedly asked for clarification.
Further issues have arisen. Leonard Cohen understood he could take loans from TH; his collateral was good (and CAK did extensive due diligence which you can review generally in the Terms & Conditions letter Cohen signed explaining the income the IP generates); and; per the Annuity Agreement terms, Cohen understood that his loans and expenditures had to be repaid within 3 years at 6% interest. I repeatedly asked Westin to prepare loan documents; had advised both Cohen and Westin that I did not handle those types of matters; and Greenberg had the schedules re. withdrawals for Westin's review. I still have not seen corrected loan documents and it has now been approximately 10 years since this was brought to Cohen's attention or he confirmed that he was aware of the improper loan documents prepared by his personal tax lawyer.
In Clause 110(b) of Greenberg's Complaint, he states that my loans totaled $293,000. That's quite a discrepancy from what Cohen's Complaint and fraud ledger indicates. Furthermore, Greenberg's complaint states that I received $135,000 per corporate distributions but that is not an accurate figure. Greenberg and Cohen seem to have come to some "mistaken" agreement re. the management agreement. I don't recall Greenberg ever receiving a copy of that management agreement so his understanding must have arisen in "hindsight." Does your client have the back-up documentation with respect to my alleged loans or corporate distributions per the books and records? Also, promissory note amounts were repaid. Those amounts do not appear on the fraud ledger and that's confusing and disconcerting.
The default judgment does not cover the federal and state tax returns filed for 2001, 2002, and 2003. It does not cover the original formation documents prepared by Westin. It does not cover 2004 and 2005 and TH has not filed tax returns. Please refer to my email of January 2002 confirming, for Cohen and Westin, that I do not handle IRS, tax matters, etc.
I would appreciate some answers and would like to know precisely how Cohen intends to handle his outstanding loans (and interest) which now total $10 million. Does he merely view those amounts as disguised salary or should this be viewed as blatant embezzlement? It has been 10 years and he and his representatives refuse to answer the questions. Kory did write about the possibility that Cohen's loans would be forgiven and I have that letter in my possession. They have not been forgiven or addressed, I might note. Cohen's sense of entitlement is astounding. I suppose that's because he has the power and wealth to hire a team of lawyers who are willing to do anything from what I can tell.
These issues need to be addressed with IRS, FTB, and State of Kentucky for the years 2004 and 2005. Since LA Superior Court wrongfully converted my ownership interest in TH to Cohen in 2006, the tax problems are now his problems. I would also like to review the asset valuations re. IP in BMT and Old Ideas, LLC. It is my opinion that Cohen not only obtained damages, illegal interest, but has received a bonus of millions re. the IP. I would like to address that as a theft loss on my tax returns. I have been advised to do so by an accountant I consulted over the situation. He's familiar with the situation, entities, legal issues, etc.
Kelley Lynch
64. 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. Any loans, however, also reduced the assets invested, and therefore reduced the investment returns.
82. 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.”
83. 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.”
88. 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.
110. Based on these checks, Agile Group, LLC calculated that, of the loan money withdrawn from Traditional Holdings:
b. Lynch personally had outstanding loans of approximately $293,000, which
loans she represented had been disclosed to and sanctioned by Cohen;
c. Lynch had been paid approximately $135,000 to cover obligations
associated with her position as Traditional Holdings’ manager and
majority owner;
Enclosed: State of Kentucky Email
