From: Kelley Lynch <kelley.lynch.2010@gmail.com>
Date: Fri, Jan 30, 2015 at 5:55 PM
Subject: Re:
To: "irs.commissioner" <irs.commissioner@irs.gov>, Washington Field <washington.field@ic.fbi.gov>, ASKDOJ <ASKDOJ@usdoj.gov>, "Division, Criminal" <Criminal.Division@usdoj.gov>, "Doug.Davis" <Doug.Davis@ftb.ca.gov>, Dennis <Dennis@riordan-horgan.com>, MollyHale <MollyHale@ucia.gov>, nsapao <nsapao@nsa.gov>, fsb <fsb@fsb.ru>, rbyucaipa <rbyucaipa@yahoo.com>, khuvane <khuvane@caa.com>, blourd <blourd@caa.com>, Robert MacMillan <robert.macmillan@gmail.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, Sherab Posel <poselaw@gmail.com>, Feedback <feedback@calbar.ca.gov>, "USLawEnforcement@google.com" <USLawEnforcement@google.com>
Hello Mr. Riordan,
While Judge Fidler's clerk, Wendy, did suggest that I write the DA about Cohen's three versions of the Spector gun story before LA Superior Court, I think the radio transcript is material and relevant. After advising Wendy that the DA was threatening and targeting me , she suggested I copy Judge Fidler in on my letter to the DA. I will send him the transcript. I have, of course, provided you with the unedited version of Paulette and my interview.
All the best,
Kelley
On Fri, Jan 30, 2015 at 5:53 PM, Kelley Lynch <kelley.lynch.2010@gmail.com> wrote:
Hello IRS,
I have generally addressed the fraud and misrepresentations in Cohen's complaint (below).I would like to remind you that Paulette Brandt and my radio interview will appear online on Sunday or Monday. I have privately provided you and others - including Dennis Riordan - with the unedited version of that interview. A surprise guest will make an appearance as well. A transcript of that interview will be sent to the Criminal Grand Jury of Los Angeles, District Attorney's Justice Integrity Division, Cal State Bar with Complaints, Judge Larry Fidler, and others.All the best,KelleyP.S. I continue to forward you the criminally harassing emails I am receiving from "Stephen Gianelli." When I file my motions, Cohen will know because the appropriate parties will be served. At that time, Cohen can respond and I will continue to address any perjury and fraud.
DECLARATION OF KELLEY LYNCHSUMMARY OF FRAUDULENT MISREPRESENTATIONS
IN PLAINTIFFS’ COMPLAINTThe substance of Leonard Cohen’s false allegations are contained in the following excerpts. While litigation is an adversarial process, the parties are not free to fabricate allegations, conceal evidence, or lie under oath. This lawsuit was commenced falsely and in a retaliatory manner after Lynch reported the allegations that Leonard Cohen committed criminal tax fraud to IRS on April 15, 2005. Leonard Cohen had no legal basis for bringing this lawsuit against Lynch. According to Lynch’s lawyers, in order for Cohen to unwind these complex transactions, he needed a theory of “recission” and appears to have fabricated one. The alleged “forensic accounting,” used to support the default judgment, is evidence of financial fraud and is nothing other than a meaningless list of numbers. This alleged accounting fails to address corporate ownership interests, assets, liabilities, and equity. Specifically, the ledger fails to address Lynch’s ownership interest in Blue Mist Touring Company, Inc., Traditional Holdings, LLC, and Old Ideas, LLC. It also fails to address the commissions Cohen has failed to pay Lynch.Throughout these proceedings, Leonard Cohen has concealed the fact that he personally borrowed (or caused to be expended) approximately $6.7 million in assets belonging to Traditional Holdings, LLC. Cohen personally signed the Annuity Agreement and understood that his loans/expenses had to be repaid within 3 years with interest. The agreed upon interest was 6%. Leonard Cohen is now attempting to use the default judgment to argue that he has no obligations to provide Lynch with IRS required form 1099 and other corporate and tax information for the years 2004 and 2005. Cohen has also used the Complaint (and some form of the “expense ledger”) to obtain fraudulent refunds from Internal Revenue Service and Franchise Tax Board. Lynch has now challenged those refunds as fraudulent.Robert Kory’s declaration confirms that the so-called accounting was done under his personal guidance. This document is false evidence and Kory has provided false testimony and statements with respect to this and other matters. Robert Kory’s declaration also confirms that he personally questioned Cohen’s transaction fees and felt, in hindsight, that they were excessive. Leonard Cohen’s personal business expenses, tax payments, legal settlements, etc. are not corporate expenses and were not deducted from the Traditional Holdings, LLC federal tax returns. Cohen’s Complaint was referred to in the documents responding to Lynch’s motion. Therefore, the fraudulent and fabricated allegations should be taken into consideration with respect to the “fraud upon the court” claims and ongoing pattern of deception. Lynch’s comments with respect to the essential fraudulent allegations are in bold in the body of the text (below):1. This civil action is another case of a tragedy that has become all too familiar in the musicindustry – 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.The tragedy here is the unrestrained and egregious fraud and perjury. Leonard Cohen understood Lynch reported allegations that he committed criminal tax fraud to IRS in the spring of 2005. Agent Bill Betzer was raised in Neal Greenberg’s June 2005 lawsuit against Cohen/Kory and that is the individual Lynch initially reported the allegations to. Agent Betzer, in turn, advised Lynch to bring the “fraud” into the IRS with a lawyer. Thereafter, he instructed her to contact the IRS fraud unit which Lynch did. Lynch also, due to the tactics used against her and high profile nature of the matter, contacted the IRS in Washington, DC and immediately began documenting everything she was dealing with for IRS and others. Leonard Cohen also had to confront and defeat Neal Greenberg’s allegations that he and his lawyer, Robert Kory, engaged in improper and criminal conduct including bribery, intimidation of a witness (Lynch), witness tampering, extortion, coercion, mail fraud, wire fraud, legal conspiracy, racketeering, subornation of perjury, defamation, and disparagement. These issues, many of which are ongoing, have not been litigated. Robert Kory personally confirmed this fact during Lynch’s 2012 trial. Judge Babcock, however, dismissed the suit against Kory due to lack of personal jurisdiction:PD: Now, even though you just said that there was no plan to extort money from Mr. Greenberg, there was a lawsuit against you in the State of Colorado, and you were named as defendant, where you were accused of engaging in civil conspiracy, extortion, outrageous conduct and defamation against Mr. Greenberg; isn’t that true? Streeter: Objection; 352. Court: He can answer the question. Kory: That lawsuit was dismissed as an illegal lawsuit before it even got started against me. PD: Okay. Let me – I understand that, but that was the allegation of the lawsuit against you, right? Kory: And it was dismissed as an illegal allegation and thrown out of court before we had to put on any evidence. PD: I understand it was dismissed but I’[m asking – PD: 12(b)(6) dismissed. You understand what that means? Court: You don’t ask questions … PD: Mr. Kory, you’re an attorney, right? Kory: Correct. PD: And how long have you been an attorney? Kory: Since 1983 … PD: You’ve been practicing for over 20 years? Kory: Correct. RT 403-404 PD: Now, you stated, Mr. Kory, that that lawsuit against you was dismissed under a 12(b)(6) motion; is that correct? Kory: Correct. PD … I’m holding in my hand a five-page court opinion from the United States District Court of Colorado dated December 5, 2005. I’d like to mark it up for identification as Defense D … PD: Isn’t it true, Mr. Kory, that you were actually dismissed in that lawsuit because the Colorado Court ordered that it didn’t have any personal jurisdiction over you pursuant to Rule 12(b)12 of the Federal Laws of Civil Procedure? Kory: As I read it here, it’s 12(b)(2). The motion was brought under 12(b)(2) and 12(b)(6), and the Court ruled on 12(b)(2) because it doesn’t even reach the 12(b)(6) if it gets 12(b)(2). PD: So the Court never ruled on the actual factual merits of the claim, it just ordered that it had to dismiss the lawsuit because it couldn’t bring you into it? Streeter: Objection; 352. Court: Overruled. PD: … Mr. Kory, there was no order of dismissal based on the actual merits of the Colorado lawsuit against you, was there? Kory: There was – ultimately the entire case was dismissed and all – on summary judgment filed by Ms. Rice, and claims against Mr. Cohen were dismissed, and to the extent that I – follow my logic. To the extent that claims against Mr. Cohen as a conspirator were dismissed, claims against me were dismissed. Because you cannot have a conspiracy alone. You have to have two people to have a conspiracy. PD: But that order that I showed you, Mr. Kory, dismissed you from the lawsuit not based on any merits of the case but because the Court ruled it didn’t have any jurisdiction over you; is that right? Streeter: Objection; asked and answered. Court: Sustained. You’re done, Mr. Ramnaney. RT 402-407Defense Exhibit D – 5- page Judge Babock Order re. KoryIt is Leonard Cohen who, through greed and a sense of entitlement, engaged in self-dealing, concealment, knowing misrepresentation and utterly reckless disregard for the truth and his own professional fiduciary duties to Lynch and numerous corporate entities. Leonard Cohen did not lose millions of dollars and, while he continues to argue “alter ego,” corporate assets are not Leonard Cohen’s personal assets. Cohen continues to conceal the fact that he personally borrowed or caused to be expended approximately $6.7 million in assets belonging to Traditional Holdings, LLC. He has willfully failed to repay those loans and has failed to provide the corporation with documents supporting the fact that these were indeed loans. That was Leonard Cohen’s obligation and he understood, having signed the Annuity Agreement, that he was entitled to borrow money from this entity but had an obligation to repay any and all loans/expenditures with interest within 3 years. The annuity obligation, according to Cohen’s own legal documents, was valued at approximately $4.7 million so one does wonder what the goal is here. Furthermore, Leonard Cohen’s personal tax lawyer extinguished the annuity obligation from the 2003 federal tax return. This evidently, when brought to the attention of IRS by Lynch, caused extreme concern for Cohen. He has addressed the fact that this exposed him to “gift taxes” and other penalties and interest. In fact, Cohen has been quite clear with the news media that his “massive tax hit” was the motivation for filing the complaint in this case.2. Kelley Lynch was Cohen’s business manager for approximately seventeen years until hefired 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 April 1988 through October 2004, Lynch worked as Leonard Cohen’s personal manager and never his business manager. A business manager is essentially a CPA who handles IRS, tax matters, accounting, and so forth. Lynch never handled any such matter and was very clear with Cohen about that fact. Leonard Cohen did not terminate Lynch in October 2004. Lynch refused to meet with him and his tax lawyer, assist them in unwinding these entities or transactions, and refused to privately hand over the corporate books and records for numerous entities. She provided those books and records to her lawyers who, in turn, transmitted them to Cohen’s legal representatives at Greenberg, Glusker. Termination was never mentioned until sometime in November 2004 when Robert Kory provided Lynch’s legal representatives with a letter back-dated to before the release of “Dear Heather.” Lynch did not siphon money from Cohen’s personal bank and/or investment accounts and any corporate distributions, tax or promissory note payments payments, or advances from the corporate entities have nothing whatsoever to do with Lynch’s 15% management commission. The preliminary analysis is nothing other than a fraudulent and meaningless expense ledger with a handful of random back-up documents.Lynch never advised Cohen that she had “got in over her head” because she does not speak in the third person and did not get in over her head. Leonard Cohen was in possession of all documents (bank statements, financial statements, agreements and contracts, and royalty statements, etc.) needed to prepare an accounting. He had ulterior motives for seizing Lynch’s bank records.3. Lynch gained control of Cohen’s financial affairs through a long process of carefullycultivated 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.Lynch did not gain “control” of Cohen’s financial affairs and this repeated false allegation seems to relate to IRS and tax matters. Lynch assisted Cohen with numerous deals, was asked to sign a Power of Attorney because he was traveling extensively and purchasing homes, requested an Indemnity Agreement with respect to Traditional Holdings, LLC, and was compensated with intellectual property for her extensive services to Cohen which far exceeded her duties as personal manager. Marty Machat, an attorney and Cohen’s personal manager, died in April 1988 and, at that time, Cohen hired Lynch as his personal manager. Lynch did not handle Cohen’s financial affairs and he had a professional team who handled those and other matters. Leonard Cohen did not deliver a studio album between 1993 and 2001. He had not released a book of poetry since approximately 1984 until sometime after he and Lynch parted ways. Cohen did use Mt. Baldy as a place to focus on writing but this in no way created a situation whereby Cohen was in the dark about anything. He is a shrewd businessman, obsessed with sales and other figures, and a micro-manager who was the driving force behind these deals. According to his own statements, Cohen has a background in business, commerce, and law. He has confirmed that he personally was intimately involved in his business dealings.In his 1993 Goldmine interview, Cohen addresses handling his business affairs and how he relates to work and money.Excerpts fromThe Stranger Music of Leonard Cohenby William RuhlmannGoldmine, February 19, 1993"You could get a freighter from Montreal to Genoa or sometimes Piraeus for a couple of hundred dollars. So, you just worked that amount of time, and then you had a couple of grand, then you'd go and live another year and come back. That was the way I did it. I got a lot of writing done that way. The alternative was university or a dismal, grim kind of job, which I already knew something about. So, that was a good way to live."The album resumed Cohen's affiliation with Columbia Records, an affiliation that deserves at least a brief mention. "I have the most curious contract," Cohen notes, "and I'm trying to simplify it, because my contract is now about that thick [he holds his hands six inches apart], and it is the 1967 contract. Lawyers rejoice. Their eyes light up, when I present them with this contract because it takes, like a week and a half to read the thing. They're delighted. I've been trying to simplify it, and nobody will simplify it. It's such an arcane and clumsy elephant of a contract that lawyers love it. They talk hours about it.""[Ienner] said, 'Leonard, you know, we love you more than some groups that sell five million copies,'" he recalls. "I said, 'Please love me less, and sell five million copies.' He set himself up for that one. But he said, 'Your integrity and your artistry is something we cherish very highly.' I said, 'Look, I got that part covered. Just treat me like a commodity. That's what I'm interested in. Whether the stuff is any good or great or not, I wrestle over that material all the time. That's not what I'm here for.'"I was representing myself at this point. [Cohen took over his own affairs after the death of his lawyer.] That was very refreshing and made them rather uneasy because usually the artists don't come in and negotiate the contract. I started undertaking that function. I found it very invigorating and refreshing. I'll never let a lawyer do that for me again. This is one of the bonuses of the whole enterprise, to actually sit with the guys and talk about how much you're worth."4. In late 1994, after completing a successful tour following his album release in 1993, Cohendecided 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 most certainly did not live a life of rigorous religious discipline. He had a deluxe cabin at Mt. Baldy which was outfitted with a recording unit, computer, fax, and phone. He and Lynch were in contact constantly and he literally contacted her constantly about his demands with respect to the 1996 Sony IP deal. Cohen also participated in a documentary, interviews, worked on material for his next studio album, and worked on his book. He communicated regularly with the Leonard Cohen files website and provided them with material. Cohen was well aware of the fact that he had not delivered a studio album to Sony since 1993 and was contractually obligated to deliver one no later than 12 months and no earlier than 24 months after the delivery of “The Future.”5. After nearly thirty years in the music industry, Cohen could afford to take a few years off tolead 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.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.6. During the Mount Baldy years, Cohen voluntarily elected to reduce his income by foregoingtouring 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.In September 2004, Lynch hired accountant Dale Burgess to review certain tax matters and handle the preparation and filing of her 2003 tax returns. At that time, she replaced Ken Cleveland. Leonard Cohen and Kelley Lynch discussed the fact that he heard she planned to report what she felt was tax fraud to IRS. He offered her anything she wanted. Cohen also demanded that Lynch meet with him and Westin (who was flying in the last weekend of October 2004) to unravel their handiwork and hand over the corporate books and records to him. Lynch reused. That is what led to the falling out. For months, Cohen attempted to coerce Lynch into a settlement and has steadfastly withheld commissions due her and has now stolen her intellectual property assets based on a fabricated narrative and willful disregard of all corporate books, records, stock certificates, non-revocable assignments, agreements, and tax returns.There was no last minute raid of Cohen’s account. Cohen agreed to provide Lynch with a check in the amount of $40,000. Lynch gave it to her mother to deposit. Her mother held it for a day and Cohen had closed his account by that time. He also began gossiping and lying to City National Bank about Lynch. They, in turn, froze her and her son’s accounts. Lynch did not control Leonard Cohen’s accounts. She was a signatory on his personal bank account. She had an ownership interest in Traditional Holdings, LLC and Blue Mist Touring Company, Inc. She has now received K-1s from LC Investments, LLC (transmitted to IRS) proving that she has been made a partner illegally on that entity. Cohen refuses to rescind those K-1s.Lynch didn’t feign cooperation. That’s why she wouldn’t meet with Cohen and had her lawyers transmit the corporate books and records to Cohen’s law firm, Greenberg, Glusker. She also refused to attend the meeting Cohen attended at her lawyer’s office. And, she refused to enter into any type of settlement agreement – including one that involved 50% community property – although Robert Kory has advised the IRS that she attempted to use Agent Sopko’s email to coerce a civil settlement. Lynch doesn’t want a settlement, refused to testify falsely against Cohen’s representatives, and is entitled to be paid for her share of intellectual property and commissions due her without any type of demands made upon her.Lynch finds the fabricated story about an “informant” farcical. The same is true for her alleged “gigolo.” Lynch did not have anyone working for her who had the ability to review the corporate books, records, stock certificates, agreements, bank, or financial statements. That would include a woman, Julie Isenberg, who worked for Lynch’s greeting card company for one week in August 2004. Lynch has been advised, by Betsy Superfon, that Isenberg was the informant. The only employees of Stranger Management were Joan and John Lynch. Lynch had no complex scheme to hide anything. Leonard Cohen is the individual who has misappropriated monies (including his nearly $6.7 million in loans), collected royalties for assets owned by Blue Mist Touring, and has now converted Lynch’s property – worth well in excess of the judgment amount – to himself via default.The transaction fees did not become an issue in 2002. Lynch asked how to repay her promissory note and all hell broke loose. Eventually, distributions in the amount of $88,000 were made to Lynch (per corporate records) which she immediately wrote a check to Traditional Holdings, LLC for and sent to Greenberg. These amounts do not appear on the accounting although Cohen himself approved these payments to Greenberg and Westin. Another issue that arose in March 2002 had to due with Sony’s $7 million 1099 to Cohen re. the TH deal. His accountant sent a letter to Cohen’s home advising him that he shuddered to think of the penalties and interest. These are the issues that arose. Cohen personally signed the fax authorizing payment of his “transaction fees” so no one would have to bring them to his attention a year later. Additionally, he entered into retainer agreements with the Grubman firm and Greg McBowman that he personally signed. He understood Lynch’s fees for her services as his personal manager. Leonard Cohen understood the ownership interests re. Traditional Holdings, LLC regardless of his fabricated narrative. It’s nearly impossible to believe that a man who writes for a living cannot read a simple one page stock certificate confirming his ownership amount in TH.7. Lynch also initiated a second strategy to supplement her income. She introduced Cohen toher 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 not Lynch’s friend. She knew his ex-wife and was unaware that he was an investor. She found his aggressive financial planning to be risky and ridiculous. Lynch, on the other hand, met with City National Bank and others in an attempt to have the TH assets properly invested.No one burdened anything with transaction fees. These are Leonard Cohen’s personal and business expenses. They include his personal tax payments, CAK settlement amount, and were not deducted from the Traditional Holdings, LLC federal tax returns because they are not and were not corporate expenses. Leonard Cohen demanded complex stock deals which required complex corporate structures. Lynch had nothing whatsoever to do with the corporate structures. She stole nothing and the ledger is evidence of nothing other than fraud. Furthermore, Leonard Cohen was aware of everything – including loans, distributions, and advances. He obsessively oversaw his finances and investments. Leonard Cohen is the individual collecting royalties related to assets owned by Blue Mist Touring Company, Inc. He is also the individual who borrowed/expended approximately $6.7 million in TH corporate assets. His loans were evidently not addressed on the tax returns.8. With the help of Greenberg and Westin, and under the guise of “saving taxes” and “estateplanning” 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.Lynch did not handle anything whatsoever having to do with “saving taxes” and/or “estate planning.” Leonard Cohen hired a team of professionals to handle those matters. Lynch did not orchestrate anything. According to her former lawyer, Mike Taitelman, when he spoke to Robert Kory he was essentially advised that if Lynch assisted Cohen, they would agree she was used as a pawn; otherwise they would say she orchestrated this mess. Lynch did not orchestrate either IP deal. She assisted with these deals and was an integral part of the team that negotiated them. Cohen demanded the IP sales; insisted upon complex stock deals; and was well aware of the terms of the Annuity Agreement. That simple two page letter, which Lynch reviewed with Cohen, confirms that he may borrow monies from the Traditional Holdings, LLC assets and must repay them. The agreement also explicitly notes that Cohen’s heirs are not beneficiaries. Leonard Cohen is the individual who created an email to Richard Westin opposing certain aspects of the first annuity deal proposal. Westin then responded, in his December 2000 email, with responses to Cohen’s questions. While Lynch most certainly has no idea what actually motivates Cohen, he advised her at that time that he was upset with his children due to the inordinate amount of money he provided them on a monthly basis (approximately $5,000-$6,000 per child per month and other expenses), did not want them as beneficiaries, and most certainly did not want them involved in any of his corporate related entities. Cohen’s August 2000 declaration, in the CAK litigation matter, addresses precisely what he knew and the fact that he was the driving force behind the 2001 deal, understood precisely what his royalties were, and chose to go with Sony rather than CAK.These deals did not actually bring in $12 million gross. Leonard Cohen also had many business expenses, paid a tremendous amount in connection with his personal expenses, and monies were withheld with respect to his personal recoupment accounts with Sony and with respect to other delivery requirements. With respect to the 1997 Sony sale, Cohen gifted the Mt. Baldy Zen Center with approximately $500,000 in stock and chose to tie up the bulk of the remaining assets in pension accounts that he then personally raided. Lynch retained control of nothing. Leonard Cohen controlled these deals, corporations, and assets. His personal tax lawyer and accountants handled the tax returns and other tax documents. And, Leonard Cohen is very clear about the fact that he is the “alter ego” of these corporate fictions who engaged in self-dealing.9. 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.Leonard Cohen is the only individual who burdened these sales with transaction fees. These are his personal fees and expenses and include payments of his personal tax obligations, settlement amounts with respect to CAK, and his business and legal representatives. These fees were not corporate expenses and were not deducted from corporate tax returns. Lynch had nothing whatsoever to do with these “complex corporate structures” and stole/misappropriated nothing. That honor goes to Leonard Cohen who has now stolen from Lynch and also misappropriated or extorted nearly $6.7 million in Traditional Holdings, LLC assets. This lawsuit is nothing other than Leonard Cohen’s defense to the allegations that he committed criminal tax fraud and engaged in self-dealing.Leonard Cohen has a pattern of falsely accusing others. He has a pattern of falsely accusing his representatives of ripping him off in order to breach contracts. The scenario with respect to Machat & Machat’s share of intellectual property and commissions due them is identical to Lynch’s situation with Cohen. One difference, however, is the fact that Steven Machat is an attorney and accountant in possession of evidence.From: <smachat@gmail.com>
Date: Wed, Feb 8, 2012 at 9:26 PM
Subject: Hi
To: Kelley Lynch <kelley.lynch.2010@gmail.com>
I need the stranger papers as I am about to sue those 2 evil liars. Cohen and his Satin, Kory.
Please get it to me tomorrow.
I can not keep waiting.
Thanks and be safe.
Sent from my Verizon Wireless BlackBerry10. Lynch, Westin, and Greenberg only belatedly informed Cohen of the transaction costsrelated 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.Cohen’s transaction fees did not arise as an issue in February 2002. Cohen personally signed the fax to Greenberg authorizing payment of his transaction fees. The issues that arose (as memorialized in the February 2002 emails between Lynch, Cohen, and Westin) were: Jennifer Brown’s slopping bookkeeping (she was a friend of Lorca Cohen’s); the $1 million Sony advance Cohen personally elected to handle as a loan rather than income in 1999 (thereafter audited by IRS); the IRS notices related to this loan/income; Sony’s $7 million 1099 to Cohen re. the Traditional Holdings, LLC deal;“I would like to point out that I am incapable of resolving anything with IRS and I assume, as has always been the case in the past with all accountants, that when I forward something to them, they are dealing with it.”“I am not an accountant and it is not my job to handle many of the things [addressed, at that time, with Cohen, Westin, Cleveland, Greenberg ...]. That would extend to notifying Sony that the 1099 had been issued in error after I caught the “mistake.”“I am not going to take the blame for tax and accountings issue.”
“Ken Cleveland wrote this letter to you because … he freaked out when he thought you had received “income” of $7 million.” [Note: Cleveland later confirmed, in a call with Lynch and Stuart Fried, that his letter was a “cover your ass” letter.]The above issues, and the fact that Westin had to prepare notes re. Cohen’s loans from TH, etc., were the issues that arose in March February 2002. Shortly thereafter, Lynch personally asked Westin to prepare a letter explaining her role in the Traditional Holdings, LLC deal. Cohen has acknowledged receiving this letter, quoted from it in the Complaint, and then fraudulently alleged that Lynch was not entitled to the amounts addressed in the corporate books, records, and agreements.March 6, 2002 – DraftSee KL notes to Richard Westinand 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 forthe 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 quitesmooth and uncomplicated.RichardCohen 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.11. Cohen only learned that Lynch had converted almost all of his retirement savings for herown 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.Lynch did not “convert” almost all of Cohen’s alleged retirement savings for her own benefit or anything else for that matter. Leonard Cohen personally borrowed or caused to be expended approximately $6.7 million in assets belonging to Traditional Holdings, LLC. He was well aware of the fact that his loans/expenditures had to be documented with promissory notes and repaid within 3 years at 6% interest. As of this moment in time, with interest, Cohen owes Traditonal Holdings, LLC in excess of $10 million. The Annuity Agreement is quite clear that any payments due Cohen (which would have begun in January 2011) can be withheld until he repays these outstanding amounts. Evidently, certain paragraphs in agreements he entered into are irrelevant to Leonard Cohen. Furthermore, Leonard Cohen and his tax lawyer engaged in what appears to be very problematic conduct with respect to the Traditional Holdings, LLC tax returns filed for the years 2001, 2002, and 2003. In 2001, they failed to report the income from the Sony sale; in 2002, using a separate tax ID number, they extinguished Lynch’s promissory note; and, in 2003, the private annuity itself was extinguished and the amount of approximately $4.7 million was moved to Lynch and Cohen’s respective capital accounts. Lynch was completely unaware of these facts and they were brought to her attention, in the fall of 2004, by her lawyers and accountant.Lynch did not have anyone working with her management team who could serve as an “informant.” The allegation is farcical and in the same class as Cohen’s allegation that Lynch had a “gigolo.” There was no one working for Lynch with access to corporate books, records, stock units, agreements, financial or bank statements, or tax returns. Nor was anyone in a position to do an analysis that would include Cohen’s corporate loans. Since Cohen misappropriated/embezzled nearly $6.7 million from the alleged retirement account, it would also be impossible for the “informant” to advise Cohen, or his daughter, that Lynch misappropriated them. This may explain why Cohen elected to use a fraudulent expense ledger to support the default judgment.12. In response to the informant’s allegations, Cohen began his own direct review of hisfinancial 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.Lynch has now been advised, by Betsy Superfon (who was addressed in the Greenberg lawsuit) that the alleged “informant” is Julie Isenberg. This individual worked for Lynch’s greeting card company for approximately one week in August 2004. She was highly supervised by Lynch’s mother and had no access to the aforementioned evidence or the ability to perform a financial analysis. She also was not in a position to address Cohen’s corporate Lynch’s, corporate distributions and ownership interest, or federal and state tax matter. The mere notion is absurd. Leonard Cohen did not discover “irregularities” in his personal bank account. His statements went directly to his home, he reviewed them religiously, and also asked Lynch – as a courtesy – to break down his expenditures (primarily so he was aware of the amounts being spent to support his son, daughter, girlfriend, etc.). Cohen would also request balance amounts for all accounts and use CNB’s automated number to check them himself. Lynch believes Cohen brought false allegations to the attention of CNB who, in turn, froze Lynch’s personal and business accounts as well as the account of her son, John Rutger Penick. This was also addressed in the Greenberg lawsuit. Lynch did not “feign” cooperation and refused to meet with Cohen and his tax lawyer, the last weekend of October 2004, to unravel their handiwork with respect to numerous entities and their creative tax planning.Lynch did not “raid” Leonard Cohen’s account at the last minute. Lynch asked Cohen if he would provide her with a $40,000 advance against either the commissions due her and/or her share of intellectual property. He agreed. This occurred in front of a witness. The check was held for a day and, by that time, Cohen closed his accounts. Lynch personally believes Cohen had already thought out some of the defenses he would use to defeat allegations that he committed tax fraud. In the fall of 2004, Cohen, Greenberg, and Westin were absolutely hysterical and begging Lynch to be “reasonable.” After Lynch’s second October 2004 meeting with Cohen at Starbucks, he offered her “anything” she wanted.13. Cohen also contacted Westin and Greenberg in the hope of verifying that the funds underGreenberg’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.Lynch has no idea when Cohen contacted Westin and/or Greenberg. She also has no idea what was discussed. What she does know is this: they were absolutely and thoroughly hysterical. Cohen was calling Lynch morning, noon, and night and sometimes as early as 5 AM. Cohen was completely aware of Lynch’s ownership interest in Blue Mist Touring Company, Inc., Traditional Holdings, LLC, Old Ideas, LLC, and all intellectual property dating back to 1967. Cohen personally signed the non-revocable assignments, many agreements, and corporate records. He also signed a one page stock certificate related to Traditional Holdings, LLC and Blue Mist Touring Company, Inc. and is an extremely literate individual. One can safely assume that he was able, at the time the stock was issued, to read the ownership interests. Additional evidence confirms the fact that he was well aware of the corporate ownership interests. Cohen personally dictated the minutes related to Lynch’s compensation of intellectual property.Leonard Cohen was well aware of his personal and business transaction fees, all corporate expenditures, and his loan amounts. Given the fact that Cohen owed, at the time the Complaint was filed in this matter, approximately $6.7 million, it is impossible to believe that he actually felt the corporate accounts contained liquidated assets totaling $5 million. In order to arrive at that conclusion, one would have to use extremely surreal mathematics.14. Only by the end of January 2005 did Cohen realize that Lynch’s misappropriation of millionsof 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.Actually, by October 30, 2004 (when Cohen, Westin, and Ricardo Cestero) met with Lynch’s lawyers, Cohen had already come up with his novel defense in response to Lynch’s lawyers letter: willfully disregard Lynch’s legal ownership interest in numerous corporate entities and argue “recission” in order to unwind his handiwork. Lynch did not misappropriate a dime so no one helped facilitate that fabricated allegation. Corporate accounts are not actually Cohen’s “till” but he is adamant that he personally is the alter ego of these corporate fictions. Cohen has blatantly disregarded his fiduciary duties to both Lynch and numerous entities.15. Through the misrepresentations made by Defendants, Cohen believed that the 1997 Sale andthe 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 did not believe the Sony deals were “financially necessary.” He addresses his “substantial royalty” income and amounts he receives in the declaration he provided the Court in the CAK failed bond deal litigation. Cohen also addresses the fact that he personally was involved with these deals and it is he who decided to pursue the IP sale with Sony rather than the CAK bond securitization deal. Lynch concealed nothing from Cohen but, as his lawyer/witness (Michelle Rice) testified, one can say anything in a legal Complaint. Michelle Rice’s declaration confirms that she wrote this Complaint so the Court should take her testimony seriously. Cohen demanded these deals because he was concerned about the future of the music industry, worried about digital downloading, felt his own sales were dwindling and was unsure that his next album (if delivered) would be well received, etc. His urgency initially arose from the fact that he needed to ensure that the sales of the “Future” album were included in the due diligence. That album had been released in 1993 and royalties generally flow through for approximately 6 years. With respect to CAK, Cohen clearly understand that substantial royalties were required to support a loan securitization deal in the amount of $5.8 million. In fact, Cohen personally signed the Terms & Conditions agreement that addressed the amounts required.The intellectual property assets do not belong solely to Leonard Cohen. Lynch has a 15% ownership interest and her property was wrongfully converted to Cohen via default judgment. The notion that these deals were undertaken to generate “large transaction fees for professionals” is laughable. Had that been the goal, not one professional would have assisted with the creation of complex stock deals. They lowered the sales price amounts substantially and were unattractive to most potential purchasers apart from Sony. Leonard Cohen is the party that benefitted from complex stock transactions.Rice: That is what they can state in the Complaint. But, as you know, you can make any kind of allegations in a Complaint … PD: And they named Ms. Lynch as one of the conspirators in that civil conspiracy; is that also correct? Rice: I don’t believe Ms. Lynch was named as a co-conspirator. RT 35816. By this lawsuit, Cohen seeks a full accounting from Lynch so that Cohen may determine theextent 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 did not need to file this lawsuit in order to prepare a full accounting. He personally was in possession of all documents and information required to prepare one. Lynch has continuously requested a full and proper accounting since 2005. Cohen and his daughter, Lorca Cohen, personally removed all business, personal, and archival material from Lynch’s office in November 2004. He also unlawfully removed Lynch’s business records. Lynch did not misappropriate anything from Cohen but it is abundantly clear that Cohen has engaged in corporate embezzlement and theft with respect to Lynch. Lynch brought this to the attention of the District Attorney’s Major Fraud Unit in 2006 but they elected not to prosecute him. Lynch withheld no documents from Cohen. He also abandoned old business records at Lynch’s home after being advised by Lynch’s lawyers to make arrangements to pick up any property from her. Cohen was well aware that Lynch worked from her office, home office, and – as a courtesy to Cohen – stored boxes of older business documents in her garage for him from the time he renovated his garage and transformed it into a recording studio and guest suite.Kory: What I saw is a request that we change the forensic accounting. That we withdraw a K-1. RT 426ill continue to address any perjury and fraud.
