MOTION TO STRIKE MEMORANDUM OF COSTS
Served electronically
Kelley
Lynch
1754
N. Van Ness Avenue
Telephone: 323.331.4250
In
Propria Persona
SUPERIOR
COURT OF THE STATE OF CALIFORNIA
COUNTY OF
LOS ANGELES
LEONARD
COHEN, an individual, Case
No. BC338322
Related
Case No. BC 341129
Plaintiff PLAINTIFFS’
NOTICE OF MOTION
vs.
& MOTION FOR ORDER TO TAX,
REDUCE AND/OR STRIKE COSTS;
MEMORANDUM OF
POINTS
& AUTHORITY
KELLEY
LYNCH, an individual DECLARATION
OF KELLEY LYNCH
Hearing & Time: 10.06.2015
8.30 AM
Defendant Civil Petition
filed: May 25, 2011
NOTICE OF MOTION AND MOTION TO THE COURT,
PLAINTIFFS, AND PLAINTIFFS ATTORNEYS OF RECORD:
PLEASE
TAKE NOTICE that on October 6, 2015 at 8.30 AM in Department 24 of the Los
Angeles Superior Court, 111 North Hill Street, Los Angeles, CA 90012, Defendant
will move this Court to tax and/or strike the costs sought by Plaintiffs,
Leonard Cohen and LC Investments, LLC.
This
motion is made pursuant to
Code Civil Procedure Section 685.070(c) and C.R.C. Rule 3.1700(b) on the
grounds that the claimed
damages and requested post-judgment interest are unreasonable, excessive, not
authorized by law, and the judgment itself is void due to lack of service of
the summons & complaint.
This
motion is based on this notice of motion, the accompanying memorandum of points
and authorities, declaration and exhibits filed herewith, records and files in
this action, such matter of which the Court may take judicial notice, and such
further evidence and argument as may be presented at or before the hearing on
this motion.
Dated:
27 July 2015
____________________________________
Kelley
Lynch
In
Propria Persona
MEMORANDUM OF POINTS & AUTHORITIES
INTRODUCTION
The basic issues involved in the instant case are the fact that
Lynch was not served Plaintiffs’ summons and complaint; the Court failed to
obtain jurisdiction over her; the December 5, 2005 and May 15, 2006 default
judgments are void; the expense ledger is evidence of financial and accounting
fraud; the lawsuit was retaliation; and, Plaintiffs are not entitled to relief
in the form of damages, pre-judgment interest, and/or post-judgment
interest. The original judgment amount
($7,341,345.00) and post-judgment interest ($6,717,808.80) total $14,059,183.80
which represents the total amount of the Renewal of Judgment filed on July 13,
2015. As there are no costs in the
Memorandum, Lynch is requesting that the Court strike the Memorandum, and
post-judgment interest, in its entirety.
The reason for striking and/or taxing the Memorandum and post-judgment
interest is because it is erroneously based on the May 15, 2006 void
judgment. The judgment is void due to the fact that Plaintiffs failed to
serve Lynch the summons and complaint; the Court failed to obtain jurisdiction
over Lynch; and, the judgment is void. Furthermore,
the entities themselves are not parties to the lawsuit and Lynch’s written
agreements, ownership interests, and compensation with respect to the
corporations have nothing whatsoever to do with respect to her services as
Leonard Cohen’s personal manager. Lynch
was not a personal manager to Cohen’s wholly owned entity, LC Investments,
LLC. She was not a business
manager. Exhibit A: Declaration of Kelley Lynch, attached hereto
and made a part hereof.
On August 15, 2005, Plaintiffs filed the Complaint
in this matter. They failed to serve
Lynch the summons & complaint and the Court therefore did not obtain
jurisdiction over Defendant.
On December 5, 2005 and May 15, 2006
default judgments were entered against Lynch.
The May 15, 2006 judgment included damages and pre-judgment interest
totaling $7,341,345.00.
On January 14, 2014, the Court denied
Lynch’s Motion to Vacate. Lynch’s motion
argued that the judgment was void, dismissal mandatory, and she was never
served the summons and complaint. She
submitted substantial evidence to this court and her witnesses were willing to
testify. See Motion to Vacate,
Declarations of Kelley Lynch and John Rutger Penick, and Case History filed
August 9, 2013, incorporated herein by reference.
On March 17, 2015, due to the extensive
perjury, fraud, and litigation misconduct used to argue against Lynch’s Motion
to Vacate, Defendant filed a Motion for Terminating Sanctions addressing the egregious
fraud upon the court. See Motion for
Terminating Sanctions (fraud upon the court); all declarations and exhibits
submitted therewith; and Lynch’s Reply to Plaintiffs’ Opposition and the
declarations and exhibits submitted therewith, incorporated herein by
reference.
On June 23, 2015, the Court denied Lynch’s
Motion addressing fraud upon the court and use of fraud, perjured testimony,
and litigation tactics to support the January 17, 2014 denial of Lynch’s Motion
to Vacate.
On July 13, 2015, Plaintiffs’ filed a
Notice of Renewal of Judgment, Application for Renewal of Judgment (attaching
the May 15, 2006 Judgment, Item 6), and Renewal of Costs that states “as filed
on June 13, 2015” although it was filed with the Court on July 15, 2015. Lynch was also served the Memorandum of Costs
by mail and by overnight mail. Lynch’s
ownership interests in Blue Mist Touring Company, Inc., Traditional Holdings,
LLC, and Old Ideas, LLC had a value.
Wrongfully terminating Lynch and retaliating against her does not take
away her entitlement to the monetary value of stock and intellectual property
assets, nor does it deny Lynch’s right to possess corporate documents and
request complete corporate accountings and financial statements.
Taxing costs means that the costs are reduced to a certain amount
because the claimed costs are excessive for some reason, striking costs means
that the costs are stricken because they are not authorized by law, or for
other reasons. Lynch contends that the
judgment itself, together with all costs and interest (pre-judgment and
post-judgment) are both excessive and not authorized by law.
Specifically, the Memorandum of Costs
improperly demands accrued interest in the amount of $6,718,808.80.
LEGAL ARGUMENT
On July 13, 2015, Plaintiffs filed a Notice of Renewal
of Judgment, Application for Renewal of Judgment, and Memorandum of Costs that
relates specifically to post-judgment interest with respect to the original May
6, 2015 default judgment. These
documents were filed following the Court’s denial of Lynch’s Motion for
Terminating Sanctions (addressing egregious fraud upon the court) on June 23
2015.
No additional specific costs were added to the Memorandum of Costs. Defendant has concurrently filed a Motion to
Vacate the Renewal of Judgment. See
Motion to Vacate the Renewal of Judgment filed concurrently, incorporated
herein by reference.
THE DEFAULT JUDGMENT IS VOID
“Under the due process clause of the federal
Constitution a personal judgment rendered without service of process on, or
legal notice to, a defendant is not merely voidable, but void, in the absence
of a voluntary appearance or waiver.” City
of Los Angeles v. Morgan (1951) 105 Cal.App.2d 726, 730.
Whether the want of
jurisdiction appears on the face of the judgment or is shown by evidence
aliunde, in either case the judgment is for all purposes a nullity--past,
present and future. Hill v. City Cab
etc. Co., 79 Cal. 188 [21 P. 728].
“Nothing can be acquired or lost by it; it neither bestows nor
extinguishes any right ... It neither binds nor bars anyone. All acts performed
under it and all claims flowing out of it are void ... No action upon the part
of the plaintiff, no inaction upon the part of the defendant, no resulting
equity in the hands of third persons, no power residing in any legislative or
other department of the government, can invest it with any of the elements of
power or of vitality.” (1 Freeman on
Judgments, 5th ed., § 322, pp. 643-644.)
Service
of summons in conformance with the mode prescribed by statute is deemed
jurisdictional, and, absent such service, no jurisdiction is acquired by the court
in the particular action. Renoir v.
Redstar Corp. (2004) 123 Cal. App. 4th 1145, 1150, 20 Cal. Rptr. 3d 603; Schering
Corp. v. Superior Court (1975) 52 Cal. App. 3d 737, 741, 125 Cal. Rptr.
337; Sternbeck v. Buck (1957) 148 Cal. App. 2d 829, 832, 307 P.2d 970).
A
court has no authority to render judgment on the basis of substituted or
constructive service of the summons when statutory requirements have not been
strictly complied with. Summers v.
McClanahan (2006) 140 Cal. App. 4th 403, 412, 44 Cal. Rptr. 3d 338
(improper service on personal manager); Zirbes v. Stratton (1986) 187
Cal. App. 3d 1407, 1416, 232 Cal. Rptr. 653 (substituted service); Eagle
Electric Mfg. Co. v. Keener (1966) 247 Cal. App. 2d 246, 251, 55 Cal. Rptr.
444 (same); Bank of America v. Carr (1956) 138 Cal. App. 2d 727, 737,
292 P.2d 587 (constructive service).
An instrument that is
void ab initio is comparable to a blank piece of paper and so necessarily
derives no validity from the mere fact that it is recorded. New England Bond & Mortgage Co. v.
Brock, 270 Mass. 107 [169 N.E. 803, 68 A.L.R. 371]. As a consequence the record thereof is not
constructive notice of its contents or of the fact that it is actually
recorded. The purpose of our recording
statutes (Civ. Code, §§ 1213-1215) is to give notice to prospective purchasers
or mortgagees of land of all existing and outstanding estates, titles, or
interests in it whether valid or invalid, which may affect their rights as bona
fide purchasers and so as to protect them before they part with their money.
Accordingly, it is obvious that invalid documents are not entitled to be
recorded, but if they are recorded, they do not give constructive notice. (45
Am.Jur. 481; cf. Meley v. Collins, 41 Cal. 663 [10 Am.Rep. 279] (forged
deed).)
“Jurisdiction over the parties is necessary
for the validity of any judgment in personam.”
California Code Civil Procedure Section 1917; Pennoyer v. Neff
(1877) 95 U.S. 714 U.S. 714, 722 [24 L.Ed. 565]; Allen v. Superior Court (1953)
41 Cal.2d 306, 309 [259 P.2d 905]; Restatement, Judgments Sections 6, 14, and
Intro. Note., p. 79. Such jurisdiction
depends upon three factors: (1) Jurisdiction
of the state, based upon there being sufficient minimum contacts existing
between this state and the parties of their property or other interests (See
Section 410.10). (2) Notice and opportunity for a hearing (See
Sections 412.10-412.30, 473.5). (3) Compliance with statutory jurisdictional
requirements for service of process (see Sections 413.10-417.30). In addition, the court in which the action is
pending must be competent to hear and decide the type of action and the amount
in controversy that are involved in the case.
When these factors are present, the court has acquired “fundamental” jurisdiction
over the parties, and this jurisdiction continues to final judgment and in
subsequent proceedings incidental thereto.”
The Court failed to obtain jurisdiction over Lynch.
THE COURT LACKED JURISDICTION
TO ENTER THE JUDGMENTS
“Lack of jurisdiction in its most fundamental
or strict sense means an entire absence of power to hear or determine the case,
an absence of authority over the subject matter or the parties.” (See generally,
14 Am. Jur. 363, sec. 160.) Examples of
this are as follows: A state court has no jurisdiction to determine title to
land located outside its territorial borders, for the subject matter is
entirely beyond its authority or power. Taylor
v. Taylor, 192 Cal. 71 [218 P. 756, 51 A.L.R. 1074]. A court has no jurisdiction to adjudicate
upon the marital status of persons when neither is domiciled within the
state. See Restatement, Conflict of
Laws, sec. 111; Ryder v. Ryder, 2 Cal.App.2d 426 [37 PaCal.2d
1069]. A court has no jurisdiction to
render a personal judgment against one not personally served with process
within its territorial borders, under the rule of Pennoyer v. Neff. A court
has no jurisdiction to hear or determine a case where the type of proceeding or
the amount in controversy is beyond the jurisdiction defined for that
particular court by statute or constitutional provision. Cambra v. Justice's Court, 4
Cal.2d 445 [49 PaCal.2d 1121].
See Abelleira
v. District
Court of Appeal, 17 Cal.2d 280, 285-291 [109 P.2d
942, 132 A.L.R. 715.
“If
a court grants relief, which under no circumstances it has any authority to
grant, its judgment is to that extent void. ... ‘The mere fact that the court
has jurisdiction of the subject-matter of an action before it does not justify
an exercise of a power not authorized by law, or a grant of relief to one of
the parties the law declares shall not be granted ... Although every exercise
of power not possessed by a court will not necessarily render its action a
nullity, it is clear that every final act, in the form of a judgment or decree,
granting relief the law declares shall not be granted, is void, even when
collaterally called in question. ...’” Michel
v. Williams, 13 Cal.App.(2d) 198 [56 Pac.(2d) 546].
PLAINTIFFS WERE AND ARE
NOT ENTITLED TO RECEIVE DAMAGES, PRE-JUDGMENT
NOT ENTITLED TO RECEIVE DAMAGES, PRE-JUDGMENT
OR POST JUDGMENT
INTEREST
The Complaint in this
matter is based on an oral contract between Leonard Cohen and Kelley Lynch for
her services as personal – not business – manager. As compensation for her services as personal
manager, Lynch was entitled to receive a commission equivalent to the sum of
15% of all Leonard Cohen’s gross income.
The Complaint failed to address the written contracts and agreements,
corporate records, as well as compensation agreements – including stock
ownership - with respect to her ownership interest, with Blue Mist Touring
Company, Inc., Traditional Holdings, LLC, and/or Old Ideas, LLC. Those contracts were binding with respect to
Lynch and the entities themselves.
Leonard Cohen’s argument continuously confirms that he personally views
himself as alter ego of these corporate entities. Leonard Cohen and LC Investments, LLC are
both the Plaintiffs in this case. The
judgment itself does not set forth what amounts were allotted to Leonard Cohen,
individually, and what amounts were allotted to L.C. Investments, LLC. Neither of these parties had standing to
bring this lawsuit. Leonard Cohen,
personally, and LC Investments, LLC, an entity owned solely by Leonard Cohen,
were and are not the owners of the intellectual property assets. The May 15, 2006 default judgment is based on
an entirely fraudulent financial ledger.
The judgment itself is void for lack of service. The judgment provided for pre-judgment
interest based upon the policy that injured parties
should be compensated for the loss of the use of their money during the period
between the assertion of a claim and the rendition of judgment. See McConnell v. Pacific Mutual Life Ins.
Co. (1962) 205 Cal.App.2d 469, 478 [24 Cal.Rptr. 5]; Note, Developments in
the Law: Damages--1935-1947 (1947) 61 Harv.L.Rev. 113, 136 [interest on amount
of claim is standard measure for loss of use of money during the period between
the accrual of claim and judgment]; Comment, Interest As Damages in California,
supra, 5 UCLA L.Rev. 262 [person deprived use of money is denied opportunity of
investing it and receiving interest on the sum].)
This policy has been implemented through a generally liberal construction of
“certainty” under Section 3287. See Cox vs. McLaughlin, 76 Cal. 60, 70, 9 Am. St. Rep. 164, 18 Pac. Rep. 100 [tracing modification of early rule from ascertainment of sum
due from face of contract to reference to standards providing debtor with
“proximate knowledge” of amount due]; see also 14 Cal.Jur.2d, Damages, § 77.) Leonard Cohen and LC Investments, LLC were
not deprived of the use of money or denied the opportunity of investing it as
they had no right to the corporate property and/or assets. The fraudulent financial ledger is evidence
that Leonard Cohen is the alter ego of these corporate entities and he
personally, together with his wholly owned LLC, have wrongfully collected
royalties belonging to Blue Mist Touring Company, Inc.
THE CORPORATE ENTITIES ARE SUSPENDED
OR NEVER REGISTERED TO DO BUSINESS IN CALIFORNIA
Corporations
that do not pay their state taxes may be suspended in California. Cal. Rev. & Tax Code § 23301. Once suspended, a corporation effectively
finds itself in a legal coma from which it can neither defend nor prosecute
civil actions during the pendency of its suspension. In the context of a civil
lawsuit, the limitations placed on a suspended corporation that is a party to
the suit present unique circumstances for all concerned. While Blue Mist Touring Company, Inc.
(suspended by FTB in California); Traditional Holdings, LLC (administratively
dissolved in Kentucky; never registered to do business in California; and a
company that does not have minimal ties to California); and Old Ideas, LLC (a
Delaware entity that registered to do business in California in 2011) are not
named as parties to this lawsuit, the May 15, 2006 default judgment, which is
the basis for the renewal of the judgment, incorporates these entities. Old Ideas, LLC, although not mentioned at
all, is evidently incorporated into the Judgment. Pursuant to California Revenue and Taxation
Code Section 23301, the exercise of corporate powers, rights and privileges may
be suspended for the failure to pay taxes. A suspended corporation, then, is a
corporation that has failed to pay its state taxes and, as a result, can no
longer exercise corporate powers, rights and privileges, including the right to
defend against and prosecute legal claims
Kaufman & Broad Communities, Inc. v. Performance Plastering,
39 Cal. Rptr. 3d 33, 136 Cal. App. 4th 212, 217?218 (2006). California is not unique in its handling of
corporations delinquent in their payment of taxes, other states employ
different legal mechanisms for dealing with said corporations. Therefore, the Renewal of Judgment, and
Memorandum of Costs, may not incorporate Blue Mist Touring Company, Inc. or
Traditional Holdings, LLC into the May 15, 2006 judgment award, renewal of
judgment, or calculate post-judgment interest based on alleged misappropriation
or harm addressed in Plaintiffs’ Complaint and/or the fraudulent financial
ledger. Old Ideas, LLC was not
registered to do business in California as of the date the Complaint was filed
and therefore should be excluded entirely from the May 15, 2006 judgment and
July 13, 2015 renewal of judgment.
Exhibit B: Schedule of
Corporations attached hereto and made a part hereof.
LAWSUIT IS RETALIATION
This lawsuit is
retaliation for whistleblower activity.
Lynch was retaliated against due to her conduct with respect to her
refusal to negotiate with Leonard Cohen and whistleblower activity. A provision of the Sarbanes-Oxley Act makes it
unlawful to “knowingly . . . take any action harmful to any person . . . for
providing to a law enforcement officer any truthful information relating to the
commission or possible commission of any federal offense.” The Sarbanes-Oxley Act amended
the federal obstruction of justice statute and criminalized retaliation against
whistleblowers who provide “truthful information” to a “law enforcement
officer” about the “commission or possible commission of any federal
offense.” This provision was not limited
in its application to publicly traded corporations; it covers every employer
nationwide. Cohen and his
legal representatives understood and have confirmed that, as of March 2007,
they were in possession of Agent Sopko’s March 2007 email to Lynch advising her
to address the allegations that Cohen committed criminal tax fraud to IRS Agent
Luis Tejeda (head of fraud for the Western Division of the United States),
provide him with the evidence, and provide him with written documentation of
the situation with as much specificity as possible. Robert Kory, who serves as Cohen’s general litigation
counsel and personal/business manager, then arranged to meet with Agent
Tejeda. At that time, he attempted to
defend Cohen submitting the Complaint, fraudulent expense ledger, and other
documents related to this case to Internal Revenue Service.
In enacting the Sarbanes-Oxley Act in 2002, Congress added retaliation
for “providing to a law enforcement officer any truthful information relating
to the commission or possible commission of any Federal offense” to the list of
statutorily-defined predicate acts.
ACCOUNTING IS EVIDENCE OF
FINANCIAL & ACCOUNTING FRAUD
FINANCIAL & ACCOUNTING FRAUD
A cause of action for an
accounting requires a showing that a relationship exists between the plaintiff
and defendant that requires an accounting, and that some balance is due the
plaintiff that can only be ascertained by an accounting. Brea v. McGlashan (1934) 3 Cal.App.2d
454, 460, 39 P.2d 877; 5 Witkin, Cal. Procedure
(5th ed. 2008) Pleading, § 819, p. 236. No such relationship existed; Lynch breached
no fiduciary obligations or agreements including with respect to Leonard Cohen
personally and/or LC Investments, LLC; and Cohen is the individual who was in
possession of all information necessary to prepare the accounting. His motives for wrongfully seizing Lynch’s
bank statements had nothing whatsoever to do with his need for an
accounting. Furthermore, Kevin Prins did
not prepare an actual forensic accounting.
The financial document used to support the default judgment,
pre-judgment and post-judgment interest, is nothing other than a fraudulent
financial ledger. Accounting fraud is a
deliberate manipulation of accounting records.
Auditors are required to
assess the appropriateness of financial statement disclosures regarding pending
litigation. Kevin Prins personally flew
to San Francisco to meet with Lynch’s accountant, Dale Burgess, at some point
in early 2005. At that meeting, they
discussed the fact that Prins was not in possession of the corporate books and
records and/or the federal and state corporate tax returns. Prins informed Lynch’s accountant that he
would review the tax returns. He and
former District Attorney Ira Reiner were copied on Robert Kory’s memorandum to
Lynch’s lawyers in February 2007 that addressed Lynch’s ownership interest in
numerous corporate entities; the shifting of phantom income to her without
distributions; and so forth. Robert
Kory’s January 2014 declaration confirms that he directed the so-called
financial audit. See Lynch’s Motion to
Vacate (August 9, 2013), Opposition to Motion to Vacate, exhibits and
declarations attached thereto, and incorporated herein by reference. See also May 15, 2006 Default Judgment and
Declarations of Leonard Cohen and Kevin Prins in support of the Default
Judgment, incorporated herein by reference.
The
U.S. Supreme Court has recognized the important role auditor's play in
anticipation of litigation, as discussed in the following statement: The
independent public accountant performing this special function [the audit] owes
ultimate allegiance to the corporation's creditors and stockholders, as well as
to the investing public. This "public watchdog" function demands that
the accountant maintain total independence from the client at all times and
requires complete fidelity to the public trust.
Arthur Young & Co., 465 U.S. at 817-18.
COHEN TESTIFIED THAT
LYNCH NEVER STOLE FROM HIM
BUT CONTINUES TO ARGUE
MISAPPROPRIATION
Lynch’s
Motion to Vacate, Motion for Terminating Sanctions (fraud upon the court), and
declarations and exhibits attached thereto, addressing the fact that during a
March 23, 2012 hearing Leonard Cohen testified that Lynch never stole from
him. This is highly relevant and
material given the fact that the Complaint, May 15, 2006 default judgment, July
13, 2015 renewal of default judgment, and the memorandum of costs are based on
a fraudulent argument that Lynch misappropriated monies from Leonard Cohen
and/or his wholly owned entity, LC Investments, LLC. Leonard Cohen provided Brian Johnson of
MacLean’s Magazine with an interview that appeared in the August 22, 2005
issue. The article and interview were
clearly coordinated with the filing of the Complaint in this matter. Cohen himself appears to have provided
emails, information, and even a photograph of Lynch to MacLean’s. He may also have instructed them to contact
Steve Lindsey, her younger son’s father who provided a completely outrageous
and self-serving false statement. Cohen
had the journalist to dinner and advised him that he was “accusing her [Lynch]
of theft.” He also confirmed that Neal
Greenberg was the “guardian” of Cohen’s so-called assets and advised him to
“Restore what you lost, and sleep well.”
Cohen’s fabricated misappropriation argument
willfully disregarded Lynch’s rightful ownership interest in intellectual
property assets, Blue Mist Touring Company, Inc., Traditional Holdings, LLC,
and Old Ideas, LLC. See Lynch’s Motion
for Terminating Sanctions Exhibits (Exhibit C-1, MacLean’s article dated August
22, 2005, and Exhibit F, March 23, 2012 hearing transcript), incorporated herein
by reference.
JUDICIAL
ESTOPPEL
Plaintiffs
have recklessly played fast and loose with the facts and evidence in this case,
related matters [Los Angeles Superior Court Cases BC338322, BC341120, BQ033717,
BS099650, SFO 000 150 (Ray Charles Lindsey custody matter)]; throughout Lynch’s
trial [Los Angeles Superior Court Case No. 2CA04539], Natural Wealth’s lawsuit
[Case No. 05-cv-01233-LTB, United States District Court, District of Colorado];
and, the Boulder Combined Court [Case No. C0072008C 0007767], and with evidence
from these cases (including the Complaint and fraudulent financial ledger)
submitted to Internal Revenue Service and possibly Franchise Tax Board. While Lynch has been deprived of due process,
the right to be heard, and property, the integrity of the judicial system is at
stake here. The Court should not countenance
the type of activity engaged in by Plaintiffs, and their legal representatives,
in this and other judicial proceeding.
The
concept of judicial estoppel prevents a party from asserting a position in a
judicial proceeding that is contrary or inconsistent with a position previously
asserted in a prior proceeding. Leonard
Cohen personally testified on March 23, 2012 that Lynch did not steal from him
and qualified that testimony by stating that they only thing Lynch stole from
him was his peace of mind. This
testimony took place before LA Superior Court.
Therefore, Leonard Cohen should not be permitted to argue a
contradictory position in this matter.
Lynch’s Motion for Terminating Sanctions addressed a tremendous amount
of contradictory and perjured statements in documents and declarations
submitted to this Court in response to her Motion to Vacate. See Motion for Terminating Sanctions, and all
exhibits and declarations attached thereto, incorporated herein by
reference. On March 17, 2015, Lynch also
filed a Request for Judicial Notice. See
Request for Judicial Notice, incorporated herein by reference.
The
purpose of judicial estoppels is to protect the integrity of the judicial
process and not the parties of the lawsuit.
Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181.
“The doctrine of judicial estoppel, sometimes referred to as the doctrine of
preclusion of inconsistent positions, is invoked to prevent a party from
changing its position over the course of judicial proceedings when such
positional changes have an adverse impact on the judicial process. See 1B
Moore’s Federal Practice ¶ .405[8], at 238-42 (2d Ed. 1988). The policies
underlying preclusion of inconsistent positions are general consideration[s] of
the orderly administration of justice and regard for the dignity of judicial
proceedings. Arizona v. Shamrock Foods Co., 729 F.2d 1208, 1215 (9th
Cir. 1984), cert. denied, 469 U.S. 1197, 105 S.Ct. 980, 83 L.Ed.2d 982 (1985)
(citations omitted). Judicial estoppel is intended to protect against a
litigant playing fast and loose with the courts. Rockwell International
Corp. v. Hanford Atomic Metal Trades Council, 851 F.2d 1208, 1210 (9th Cir.
1988) (citations omitted). Because it is intended to protect the integrity of
the judicial process, it is an equitable doctrine invoked by a court at its
discretion.
Judicial
estoppel is most commonly applied to bar a party from making a factual
assertion in a legal proceeding which directly contradicts an earlier assertion
made in the same proceeding or a prior one. [Citations.]” (Russell v. Rolfs
(9th Cir. 1990) 893 F.2d 1033, 1037, citing Religious Technology Center v.
Scott (9th Cir. 1989) 869 F.2d 1306, 1311 (Judge Hall dissenting), internal
quotes omitted.)
California
courts have utilized the concept of judicial estoppel and have followed the
rule laid down in Oneida Motor Freight, Inc. v. United Jersey Bank (3d
Cir. 1988) 848 F.2d 414.) In that case, the federal court held that where a
debtor in bankruptcy violates its statutory and fiduciary duty to disclose a
current claim during a bankruptcy proceeding, equitable and judicial estoppel
operate as a bar to further litigation by the debtor. Conrad v. Bank of America (1996) 45
Cal.App.4th 133, 137-138. In explaining
the difference between equitable and judicial estoppel, the court in Oneida Motor Freight stated that
judicial estoppel “applies to preclude a party from assuming a position in a
legal proceeding inconsistent with one previously asserted. Judicial estoppel looks to the connection
between the litigant and the judicial system while equitable estoppel focuses
on the relationship between the parties to the prior litigation.” Oneida Motor Freight, Inc. v. United Jersey
Bank, supra, 848 F.2d at p. 419. “Consequently,
judicial estoppel is especially appropriate where a party has taken
inconsistent positions in separate proceedings.” Jackson
v. County of Los Angeles, supra, 60 Cal.App.4th at p. 181.) As the primary
purpose of the doctrine of judicial estoppel is not to protect the litigants
but to protect the integrity of the judiciary, the doctrine does not require
reliance or prejudice before it may be invoked.
Billmeyer v. Plaza Bank of
Commerce, supra, 42 Cal.App.4th at p. 1092.
Full,
truthful disclosures in judicial or administrative proceedings are important in
and of themselves. The notion that
verdicts, judgments, and orders can be obtained through the use of fraudulent
upon the court, fraudulent representations, false accusations, fabricated
narratives, concealed evidence, falsified financial data, and perjured
statements and/or testimony is abhorrent and an aberration of justice.
CONCLUSION
Based
upon the foregoing facts and authorities, Defendant Kelley Lynch respectfully
requests that the Court grant her motion to strike the Memorandum of Costs
and/or tax the additional post-judgment interest.
Dated:
27 July 2015 Respectfully
submitted
_________________________________
Kelley
Lynch, In Propria Persona
MOTION EXHIBIT A
Exhibit A: Declaration of
Kelley Lynch
DECLARATION OF KELLEY LYNCH
[Motion to Strike Memorandum of Costs/Tax
Costs]
I, KELLEY LYNCH, declare:
1. I
am a citizen of the United States who currently
resides in Los Angeles, California. I am
over the age of 18 years. I have
personal knowledge of the facts contained
in this declaration and if called upon to testify I could and would testify
competently as to the truth of the facts stated herein.
2. I was not served the summons and
complaint in this case. I attempted to
address this fact with Leonard Cohen and his legal representatives
relentlessly. I was repeatedly advised
that his lawyers could not speak with me or, in the alternative, they simply hung
up on me. This is completely
unprofessional conduct.
3. The proof of service is evidence of
extrinsic fraud. I did not resemble the
individual in the proof of service. At
the time of alleged service, August 24, 2005, I had extremely short, nearly black
hair, was exceedingly thin, had blue eyes, and was approximately 5’6”
tall. I had two co-occupants at the time
of the alleged service, and other attempts to serve me, and those individuals
were both male: my son, John Rutger
Penick, and Chad Knaak. At no time was
anyone advised to evade service. I have
no knowledge, and neither do my co-occupants at the time, of any alleged
co-occupant or guest that resembled the individual described in the proof of
service. It is my position that the
process server never came to my house and merely relied on the description
provided to him. There is no other
explanation for this situation. I also
have no idea why I did not receive the Complaint by mail. What I do know is this: I have relentlessly attempted to address this
fact and Cohen, and his legal representatives, steadfastly refused to address
the lack of service with me. A
reasonable and professional individual who was contacted and advised that the
defendant was not served would have made arrangements to serve the document
properly. At no time did Leonard Cohen
or his legal representatives make any such attempt. In the alternative, they claimed
“harassment.”
4. By December 2005, Leonard Cohen used
the Complaint and some version of the fraudulent financial ledger to file his
2005 tax returns, amend his 2003 and 2004 returns, and apply for and receive
fraudulent tax refunds from the Internal Revenue Service and Franchise Tax
Board. In March 2007, after I met with
agents from the U.S. Treasury, Robert Kory contacted IRS Agent Luis Tejeda to
discuss Agent Sopko’s email to me. That
email instructed me to report the allegations that Cohen committed criminal tax
fraud to Agent Tejeda, submit evidence to him, and document the matter with as
much specificity as possible. At some
point thereafter, Robert Kory met with Agent Tejeda and the Complaint,
fraudulent expense ledger, May 15, 2006 Default Judgment, and other documents
were used to defend Leonard Cohen with IRS.
5. I was never Leonard Cohen’s business manager. From April 1988 until October 2004, I worked
as Cohen’s personal manager and in other capacities. Cohen and I eventually formalized an
additional compensation agreements (that related to services rendered having
nothing to do with my services as Cohen’s personal manager). At some point in or around 1994, Leonard
Cohen agreed to compensated me with 15% of all gross income and 15% of all
intellectual property. There were
additional agreements that are not material to this particular Motion apart from
the fact that I am entitled to payment for services rendered. In 1999, I was compensated for my services
(again having nothing to do with my work as Cohen’s personal manager) with a
15% ownership interest in Blue Mist Touring Company, Inc. By that time, all Cohen related intellectual
property was formally assigned to Blue Mist Touring Company, Inc. My compensation agreement was identical to
the compensation agreement Machat & Machat had with Cohen. Machat & Machat served as Cohen’s legal
representatives and personal managers for approximately 20 years until Martin
Machat’s death in April 1988.
6. Leonard Cohen, and his legal
representatives, have now falsely accused me of forging and/or fabricating the
Declarations of John Rutger Penick, Clea Surkhang, Palden Ronge, and Daniel
Meade. I am therefore attaching the
original limited powers of attorney I was provided by these individuals when
they authorized me to “conform” their signatures. Copies of their declarations with their
personal signatures have also been submitted to this Court. I have been forced to confront one lie after
another, one false allegation after another, inconceivable slander and
defamation, and the harassment and targeting of my sons, family members,
friends, and business acquaintances.
Exhibit A: Limited Powers of
Attorney.
7. Paulette Brandt addressed the situation
with respect to my Mother’s declaration.
My mother intended to mail the declaration to me, after both Paulette
and I carefully reviewed it with her, but unfortunately on December 26, 2013,
my mother had a stroke. It is my
personal opinion that this vile situation affected my mother’s health and
well-being.
8. My son, John Rutger Penick, has
provided an additional declaration for use in Case Nos. BC338322 and
BQ037717. His declaration addresses a
great deal of what he has witnessed and the fact that he and his brother have
been relentlessly targeted. My son, Ray
Charles Lindsey, previously provided me with a declaration that was submitted
to this Court. That declaration
addressed the fact that, since he was a minor, he has been relentlessly
harassed to the point of becoming physically ill. He confirmed that Cohen’s lawyer, Michelle
Rice, was copied in on some of the criminally harassing emails.
9. This lawsuit is retaliation. In October 2004, Leonard Cohen understood
that I planned to report what I believed was tax fraud to Internal Revenue
Service. We had mutual friends and one
of them evidently passed along information with respect to my decision. On July 25, 2004, I wrote the IRS Chief Trial
Counsel’s office with respect to issues related to Leonard Cohen that I found
deeply disturbing. On April 15, 2005, I
reported the allegations that Leonard Cohen committed criminal tax fraud to
Internal Revenue Service. I had also
contacted the Kentucky Revenue Cabinet as Traditional Holdings, LLC is a
Kentucky entity. Exhibit B: Letter to IRS Chief Trial Counsel’s
Office. I have been documenting
everything for IRS, FBI, DOJ, Treasury, and others in emails since
approximately July 2005.
10. The financial ledger used to support the
Default Judgment is evidence of financial and accounting fraud. It willfully disregards, among other
evidence, corporate books, records, agreements, written contracts, non-revocable
assignments related to intellectual property, stock certificates proving
ownership, stock ledgers, and federal tax returns. Leonard Cohen has consistently argued that he
is the alter ego of Blue Mist Touring Company, Inc., Traditional Holdings, LLC,
and Old Ideas, LLC. The default
judgment, ledger, renewal of judgment, and memorandum of costs, together with
other documents, are evidence of theft and embezzlement.
11. Leonard Cohen has willfully concealed his
personal expenses and believes Traditional Holdings, LLC should be responsible
for them. His loans, and personal
transaction expenses, total approximately $6.7 million. Leonard Cohen personally executed the Annuity
Agreement in December 2000 and understood that he was authorized to take loans
and/or advances but they had to be repaid within three years. The agreed upon interest was set at 6%. That was for all “shareholder loans”
including mine so it is impossible to understand why Leonard Cohen is
attempting to benefit with additional interest when he is not the corporate
entity. Leonard Cohen also understood
that if his loans/advances were not repaid within three years, Traditional
Holdings, LLC was not responsible to provide him with the annuity obligation
(that did not begin until January 2011) until his loans/advances were repaid in
full with interest. He has steadfastly
refused to address his loans/expenses.
Leonard Cohen also understood the reasons for my ownership interest in
Traditional Holdings, LLC. Those reasons
involved concerns about arm’s length transactions and self-dealing. Leonard Cohen also understood that he was
ultimately responsible for documenting his loans.
12. Another issue Leonard Cohen has failed to
address is the activity with respect to the Traditional Holdings, LLC federal
tax returns. In 2001, Cohen and his
representative failed to report the income from the 2001 Traditional Holdings,
LLC transaction; in 2002, they extinguished my private annuity. In 2003, they extinguished the annuity
obligation. The obligation itself was
moved to the capital account. This
information was brought to my attention by my account and tax lawyers in
September and October 2004.
13. Leonard Cohen has also failed to address
the fact that the amounts he is arguing are misappropriated from, for example,
LC Investments, LLC were deducted from federal tax returns. His personal tax and corporate lawyer,
Richard Westin, and Cohen’s accountant, Ken Cleveland, prepared the corporate
tax returns. I had nothing whatsoever to
do with the handling of tax matters, IRS filings, IRS required tax information,
loan documents, financial statements, investment accounts, financial or
investment advice, accounting, corporate and/or legal matters, or the formation
of the entities themselves. Leonard Cohen
is the sole owner of LC Investments, LLC and these tax returns were prepared on
his behalf. There are other very serious
tax matters and that would include, but is not limited to, the fraudulent IRS
and FTB tax refunds Cohen obtained using the Complaint in this matter and some
version of the fraudulent financial ledger.
These refunds have now been challenged with IRS and FTB as fraudulent.
14. Blue Mist Touring Company, Inc. owns all
intellectual property that was assigned in 1998 and 1999. I did not have an ownership interest in this
entity when the intellectual property was irrevocably assigned. I personally spoke to Cohen about these
assignments, prior to his executing them, and he is the individual who dictated
the minutes compensating me with an ownership interest in Blue Mist Touring
Company, Inc. and the intellectual property.
15. With respect to the so-called accounting,
that Lynch has requested for approximately 10 straight years, Leonard Cohen is
the individual who was in possession of that information. He and/or his daughter, Lorca Cohen, removed
all of Cohen’s archival materials from my personal management offices. I was not present. They also removed every business and
corporate file in my offices. The files
contained the agreements, intellectual property assignments, other corporate
documents, tax returns, royalty statements, personal and corporate bank
statements, investment statements, all written music and book publishing
contracts and other documents. Cohen
evidently was not in need of an accounting since one does not exist and what
was submitted to the Court is a fraudulent financial ledger. A corporate accountings includes ownership
interests, assets, and liabilities.
Leonard Cohen’s loans should have appeared on the corporate accountings. My distributions, per corporate books and
records, should have been characterized as such. These are only some of the issues with
respect to the so-called “accounting.”
16. The fraudulent expense ledger is evidence
that Leonard Cohen and LC Investments, LLC collected royalty income related to
assets that belong to Blue Mist Touring Company, Inc.
17. As I was entitled to receive 15% of all
gross income, some of which Cohen deposited into this personal bank accounts, I
was absolutely entitled to receive commissions on income deposited to his
personal bank account.
18. I am aware that only two trusts existed
and have no idea what the third trust (or LLC) on the fraudulent expense ledger
might be. Those two trusts were the
Cohen Family Charitable Remainder Trust and the Sabbath Day Trust.
19. I cannot understand the fraudulent
expense ledger. It is a meaningless list
of numbers with a handful of random back-up documentation.
20. As of today, I am still not in receipt of
IRS required form 1099 for the year 2004.
I am not in receipt of corporate tax documents and financial statements
for the years 2004, 2005, and 2006. I
should, at the very least, have received the corporate information through the
date the Default Judgment was entered in May 2006. Leonard Cohen has taken the position that the
Default Judgment is evidence that he is not obligated to provide me with IRS
required tax and corporate information.
He has also taken the absurd position that the fraudulent restraining
orders prevent him from transmitting, or my requesting, IRS required tax and
corporate information. His lawyers have
attempted to argue that the fraudulent restraining order, that was not granted
on behalf of any corporate entity, prevents me from effecting service on
them. I would like to note that Robert
Kory, Kory Rice, is listed as the Registered Agent of LC Investments, LLC.
21. Leonard Cohen testified at the March 23,
2012 hearing that I never stole from him – just his peace of mind. He also informed Brian Johnson, MacLean’s
Magazine, that he was not accusing me of “theft” in the interview/article that
was coordinated with the filing of the Complaint in this matter. Steve Lindsey, my younger son’s father, was
evidently contacted by MacLean’s and gave them what I view as an evil comment
that was and remains absolutely false.
His custody lawyer, Daniel Bergman, is now representing Leonard
Cohen.
22. It is my personal belief that the
SWAT/King Drew matter, as well as the custody matter, were used to crush and destroy
me. Leonard Cohen, through Robert Kory,
offered me as much as 50% community property.
I was also offered the value of my 15% ownership interest in all
intellectual property, my full 15% commission on items that remain outstanding,
and other substantial offers. My
accountant, Dale Burgess, and lawyers, DiMascio & Berardo, were present for
the offer of 50% community property. My
lawyers actually addressed that offer in writing to me. After I met with the Treasury agents, my
accountant asked me to advise IRS and Treasury that he was present for this
offer. He formerly worked for IRS and
was convinced their Criminal Intelligence Division should be involved in this
situation.
23. I continue to be harassed, stalked,
slandered, and threatened by Stephen Gianelli, the Bay Area lawyer who appears
to serve as a proxy of Leonard Cohen’s and/or his legal representatives. I, and others, have received countless emails
from this man that contain legal opinions and research about these legal and
tax matters. He routinely lies to IRS,
FBI, DOJ, Treasury, and now the Senate Judiciary Committee. I contacted the Senate Judiciary Committee’s
Whistleblower division for a number of reasons.
One of those reasons has to do with the fact that a Canadian citizen,
Leonard Cohen, thinks it is appropriate to illegally use my social security
number to claim “theft losses” with Internal Revenue Service and/or the U.S.
Treasury Department. I have provided the
Senate Judiciary Committee with the declaration and evidence that was
previously submitted to Internal Revenue Service and ultimately provided to
this Court.
24. Many of the documents presently under
seal are available on Pacer, through the Southern District of New York, were
attached to Natural Wealth’s lawsuit as evidence, or are my own emails refuting
Leonard Cohen and his tax lawyer with respect to many issues and documenting
the insanity that surrounded the inadvertent $1 million and $7 million 1099s
Sony “inadvertently” issued Leonard Cohen in 2002. Other documents belong to Machat and Machat.
25. I am concurrently filing Notices of
Appeal with respect to the Order sealing these documents; the Court’s denial of
my Motion for Terminating Sanctions (addressing egregious fraud upon the
court), a motion to vacate the fraudulent domestic violence order, and intend
to pursue the legal remedies available to me.
26. Blue Mist Touring Company, Inc. was
suspended by the Franchise Tax Board; Traditional Holdings, LLC, a Kentucky
entity that never registered to do business in California, has been
administratively dissolved by the State of Kentucky, and Old Ideas, LLC did not
register to do business in California until 2011. As of the date I filed my Motion to Vacate,
LC Investments, LLC listed its business address as my former P.O. Box and me as
the Registered Agent. Sometime
thereafter, the Registered Agent was changed to Robert Kory, Kory Rice, and the
business address was changed to Kory & Rice’s business address. Plaintiffs are not entitled the damage or
interest awarded them.
27. This lawsuit is retaliation due to the
fact that I reported what I believed was Leonard Cohen’s tax fraud, and my
lawyers and accountants confirmation that it was criminal tax fraud, to
Internal Revenue Service, State of Kentucky, Franchise Tax Board, and others on
July 25, 2004, April 15, 2005, and thereafter.
I declare under the penalty of perjury
under the laws of the State of California that the foregoing is true and
correct.
This
declaration is executed on this 28th day of July 2015 in Los Angeles,
California.
____________________________________
Kelley Lynch
LYNCH DECLARATION
EXHIBIT A
Limited Powers of Attorney
John Rutger Penick
Clea Surkhang Westphal
Palden Ronge
Daniel J. Meade
LYNCH DECLARATION
EXHIBIT B
Kelley Lynch letter to
IRS Chief Trial Counsel’s Office
July 25, 2004
Kelley Lynch
419 N. Larchmont Blvd., Suite 91
Los Angeles, California 90004
323.935.9939
July 25, 2004
Department of the Treasury
Internal Revenue Service
Office of Chief Trial Counsel
Small Business/Self Employed
Division Counsel
3018 Federal Building
300 N. Los Angeles Street
Los Angeles, California 90012
Re: Leonard Cohen vs. Commissioner (Docket No.
7024-02)
To Whom It May Concern:
I am writing with respect to
the above referenced Trial Court case and related matters. I am Leonard Cohen’s personal manager and
have an ownership interest in three entities with him.
Those entities are Blue Mist
Touring Company, Inc., Traditional Holdings, LLC, and Old Ideas, LLC. These three entities either own or sold
intellectual property.
For the year 1999, Sony Music
issued a 1099 to Leonard Cohen in the sum of $1 million. On January 8, 2002, IRS issued Letter No.
3219 (SC/CG) to Leonard Cohen for the year ending December 31, 1999 showing a
deficiency in connection with tax form 1040.
This situation was initially handled by Leonard Cohen’s personal tax and
corporate attorney, Richard Westin, who then referred Cohen to Hochman
Rettig.
I became particularly
concerned with respect to the conduct of Leonard Cohen and his representatives
in January and February 2002. The reason
for this is due to hysteria that arose in connection with the “inadvertent”
1099s Sony issued to Leonard Cohen personally in the amounts of $1 million and
$7 million respectively. Leonard Cohen’s
tax accountant wrote and advised him that he shuddered to think of the
penalties and interest due. Leonard
Cohen called his tax accountant after receiving his letter to discuss the
matter. This matter was then discussed,
both telephonically and in emails, with Leonard Cohen, Richard Westin, and Neal
Greenberg (Cohen’s financial adviser and investor). These 1099s related to a deal that Sony
pursued which closed in 2001.
What concerns me specifically
is the fact that the Sony deal was done with Traditional Holdings, LLC and not
Leonard Cohen. The $1 million
non-refundable prepayment should have either been paid to Traditional Holdings,
LLC or transferred to Traditional Holdings, LLC. To complicate matters even further, the
assets that were sold to Sony belong to Blue Mist Touring Company, Inc. and
were not assigned to Traditional Holdings, LLC.
The reason for this is due to the fact that, while Sony initially
pursued this deal with Blue Mist Touring Company, Inc. (and began their due
diligence with that entity), Cohen’s accountant and tax lawyer raised issues
related to collapsible corporations.
Richard Westin represents Leonard Cohen.
He does not represent me or the entities themselves. I did provide Westin with a very limited
power of attorney authorizing him to prepare and file the Traditional Holdings,
LLC formation documents with the State of Kentucky. I also agreed, after Cohen instructed him to
do so, to permit Richard Westin to prepare my Indemnity Agreement with respect
to my investment in Traditional Holdings, LLC via a promissory note. I do not understand how an individual invests
in a company via a promissory note and, at the same time, receives
distributions with which to the payments.
I am enclosing Richard Westin’s March 6, 2002 letter summarizing this
matter. I specifically requested that he
write this letter to avoid any future confusion between me and Leonard
Cohen. According to the corporate
records, I receive $20,000 and $24,000 which pays the promissory note and
taxes. I also receive $240,000 year
(from profits) to pay whatever taxes Westin advises are due with respect to
Traditional Holdings, LLC. Richard
Westin handles the Traditional Holdings, LLC tax returns and prepares the
K-1s. While I am to receive 100% of the
profit (and this was the agreed upon amount Cohen and Westin arrived at), I am
unable to obtain financial statements and/or profit and loss statements from
Neal Greenberg. And, while Richard
Westin and Neal Greenberg are supposed to handle all loan documentation
(Greenberg would have those details), most of Leonard Cohen’s loans (totaling
millions) from Traditional Holdings, LLC remain undocumented. I would also like to note that Neal
Greenberg’s financial statements are incoherent and originally co-mingled
Leonard Cohen’s personal accounts; his charitable remainder trusts; and the
Traditional Holdings, LLC accounts on one statement prepared for Leonard Cohen
personally. Greenberg also provides a
courtesy monthly email that includes the loans which he and Westin have
repeatedly confirmed are assets of Traditional Holdings, LLC. I am alarmed by the complete lack of
attention to corporate governance. I
also enclose herewith Neal Greenberg’s January and June 2004 letters to Leonard
Cohen raising “IRS warnings” and dangers.
I’ve reviewed these letters with Leonard Cohen and he advised me not to
inform Neal Greenberg of any future income.
That would include the studio album that will be delivered; his plans to
tour behind that album; and the third intellectual property deal we are
pursuing. That deal is also complicated
because Leonard Cohen is once again demanding unattractive stock deals. Leonard Cohen continually advises me that he
does not want to pay ordinary income taxes.
I find these comments alarming in light of some of the other activity.
I have no expertise in IRS or
tax matters and find a great deal of the discussions about tax matters
thoroughly confusing if not downright deranged.
Some of the information I receive is incoherent. I do not handle IRS, tax, accounting,
financial, investing, legal or inadvertent 1099 matters. I also do not handle financial statements,
financial reports, loan documents, or promissory notes. Leonard Cohen has a team of professional
representatives handling those matters.
I am enclosing an email dated February 12, 2002 between me, Leonard
Cohen, and Richard Westin that is self-explanatory and addresses some of my
concerns.
On January 17, 2003, Hochman
Rettig wrote David R. Jojola of the Los Angeles Office of the Chief Trial
Counsel. This matter was handled by
Steve Blanq at Hochman Rettig. I had concerns
about Traditional Holdings, LLC and the private annuity agreement. I am enclosing many of the corporate records
for these entities; the Annuity Agreement; and my Indemnity Agreement. I am also enclosing the stock certificates,
non-revocable assignments, and other documentation related to my ownership
interest in Blue Mist Touring Company, Inc., Traditional Holdings, LLC, and Old
Ideas, LLC which was formed in June 2004 in Delaware (by Richard Westin) and
owns the intellectual property associated with Cohen’s forthcoming studio
album.
After I addressed my concerns
with Steve Blanq, I sent him some of the Traditional Holdings, LLC documents
and the Annuity Agreement. I then
mentioned to Richard Westin that I spoke to Steve Blanq about these matters. I received a phone call from Steve Blanq advising
me that he spoke to Richard Westin who informed him that I do not have
attorney/client privilege and therefore Steve Blanq may not discuss these
matters with me. Given the fact that I
have an ownership interest in Traditional Holdings, LLC, I find that statement
alarming. Leonard Cohen personally wrote
Richard Westin and Neal Greenberg wrapping them in attorney/client privilege
and excluding me.
Hochman Rettig’s letter
addressed the factual and legal analysis of the Cohen v. Commisioner
matter (Docket No. 7024-02) as follows:
“Leonard Cohen, through his representatives, began negotiations in 1999
with Sony Music International ("SMI") for a buyout of his SMI master
recordings catalog. In an effort to secure that SMI was serious about the
buyout and to secure future performance, Mr. Cohen demanded a deposit of
$1,000,000. Ultimately, SMI agreed to this request and on November 5, 1999,
wired Mr. Cohen $1,000,000. Accompanying
the wire transfer was a Ietter dated November 5, 1999 which is attached hereto
as Exhibit A. The letter from Paul Gilbert of SMI provides: ‘This amount is deemed a partial prepayment
against the proposed $8 million buy-out of Leonard's future royalty interests
in his master recordings and compositions under all of his agreements with Sony
Music and Sony/ATV.’ The factual basis
for treatment as a deposit is further supported by Mr. Gilbert's letter dated
April 1, 2002 (attached hereto as Exhibit B) which provides: ‘. . . this letter
is to confirm that the $ 1,000,000 paid to you by Sony Music Entertainment,
Inc. (“SMEI") in November of 1999 was a deposit towards a possible royalty
buyout …’”
This is not my understanding
with respect to the $1 million prepayment.
I would like to keep this letter confidential because I am convinced
that I would lose my job if Leonard Cohen, or his representatives, were to find
out that I contacted IRS. There has been
so much paranoia and hysteria on the part of Leonard Cohen and his
representatives over this matter that I can conclude nothing other than some
type of egregious tax fraud has occurred.
The history of this deal, and
specifically the $1 million non-refundable prepayment, actually began when
Leonard Cohen actively began pursuing intellectual property deals. He closed the first deal, with Stranger
Music, Inc., in 1996. He then actively
began pursuing other intellectual property which included a possible bond
securitization deal. As of November
1999, Leonard Cohen planned to close a bond securitization deal with CAK. In order to pursue that deal, Cohen formed LC
Investments, LLC. CAK demanded a
bankruptcy proof entity. However, SOCAN
(the Canadian performing rights society) refused to pay writer share of
royalties to a company not owned 100% by the writer, Leonard Cohen. Therefore, it was decided and agreed (by
Cohen and his representatives) that LC Investments, LLC would collect the SOCAN
royalties. These assets are owned by
Blue Mist Touring Company, Inc. which is true for all intellectual property
excluding the forthcoming the intellectual property related to the forthcoming
studio album that will be delivered to Sony in the near future. I am enclosing Leonard Cohen’s declaration in
the CAK litigation that ensued and IRS can review the CAK litigation documents
that were filed in the Southern District of New York (Docket No. 1:00-cv-01068-CBM).
What concerns me about the
letter Hochman Rettig wrote is this paragraph:
The legal authority is derived from the Supreme Court decision in
Commissioner v. Indianapolis Power & Light Co., 493 U-S. 203, I 10 S. Ct.
589 (1990). The Court created a distinction between the taxation of advance
payments and the taxation of refundable deposits, although the Court confirmed
that advance payments are generally taxable and defined "advance payment"
as a non-refundable payment. The Court,
however, held that deposits are not taxable. The Court defined
"deposits" as refundable payments that are made to secure the payor's
performance of its legal obligations under the contract. Please note that the
Court also found that a deposit is not taxable even if the payor elects to
apply the deposit against amounts owed to the payee. Thus, if the payor
fulfills its obligations under the contract, the deposit is refunded. That is
the exact scenario presented in this matter.
This analysis is also consistent with the United States Tax Court's
longstanding treatment of real estate lease deposits where the Court has
distinguished between a sum designated as a prepayment of rent (taxable upon
receipt) and a sum deposited to secure the tenant's performance of a lease
agreement. J & E Enterprises, Inc, v. Commissioner.”
The reason this paragraph
concerns me is that Sony personally contacted me about pursuing the 2001
intellectual property deal with Leonard Cohen.
Stuart Bondell, Sony Music Business Affairs, explained to me that Sony
did not want Leonard Cohen pursuing a bond securitization deal. Evidently they had concerns about
establishing artist precedent for these types of deal and were specifically
concerned about not having the ability to pay artist record advances. As Stuart Bondell explained, advances are the
currency of the music industry and permit Sony (and others) to encourage
artists to submit their contractually obligated albums. I phoned Leonard Cohen and explained that
Sony wanted to pursue the intellectual property deal with him. Cohen was somewhat worried that Sony was
making an offer and could later change their minds. Therefore, he advised me that he would be
willing to forfeit the CAK bond securitization deal if Sony paid him a
substantial non-refundable prepayment against the $8 million deal price. The contractual details had to be resolved
and negotiated. I phoned Stuart Bondell
back and passed along Cohen’s message and Sony agreed to pay the $1 million
non-refundable prepayment Cohen requested.
Therefore, from my perspective, Cohen received $1 million in income from
Sony in 1999. However, the assets were
owned by Blue Mist Touring Company, Inc. at the time. As of 2001, Richard Westin had formed
Traditional Holdings, LLC who ultimately pursued the stock deal Leonard Cohen
personally demanded.
Your October 8, 2002 letter
to Richard Westin requests all documents related to the $1 million payment
including correspondence, contracts, agreements, royalty obligations, loan
documents, emails, letters, and checks.
While I am enclosing a substantial amount of evidence, IRS would
literally have to make arrangements to come into my management offices and go
through the files. They are voluminous
and include the corporate files and corporate books and records. While I am not involved with this IRS and/or
Tax Court matter at all, I do believe that information is being concealed from
the IRS and that makes me extremely uncomfortable.
It was my understanding that
Richard Westin and Ken Cleveland, Cohen’s accountant, decided to handle the $1
million as a loan on Cohen’s personal tax return. I was not involved in that discussion but was
on a conference call when they two of them confirmed this and asked me to call
Leonard Cohen to see if he agreed. I
then phoned Leonard Cohen personally; he confirmed that he wanted the $1
million handled as a loan; and I called Westin and Cleveland back and confirmed
this with them.
This essentially sums up my
concerns about the $1 million prepayment; $1 million prepayment; $7 million
inadvertent 1099; and the fact that the assets are owned by Blue Mist Touring
Company, Inc. Initially, after the
non-revocable assignments were executed by Cohen and me, Richard Westin advised
us to begin depositing all royalty income to Blue Mist Touring Company,
Inc. At a later date, he advised me (and
some of this is in writing) that those deposits should be explained as
inadvertent. This situation also causes
me concern because the income was deposited to Blue Mist Touring Company, Inc.
and Westin determined that Leonard Cohen personally should issue the
1099s. Richard Westin also advised me to
rip up the SOCAN and writer share assignments with respect to Blue Mist Touring
Company, Inc. I took copies home and enclose
copies herewith.
Another ongoing issue relates
to where the offices for these entities are.
There are no offices. I have
continuously advised Richard Westin that my personal management offices are not
the corporate entities’ offices. These
entities use my P.O. Box for their corporate office addresses. Traditional Holdings, LLC’s corporate office
is listed as Richard Westin’s home address in Kentucky. Most of these entities are Delaware
entities. I do not know why Leonard
Cohen and his representatives decided to form Traditional Holdings, LLC in
Kentucky. I am enclosing letters Richard
Westin prepared for Leonard Cohen and me with respect to the initial proposals
with respect to the use of an annuity.
Leonard Cohen rejected the first proposal and did not want his adult
children involved in any entity he has an ownership interest in.
Please see evidence enclosed.
Thank you for your attention
to this matter and, if I uncover additional information, I will submit that to
Internal Revenue Service as well.
Very
truly yours,
Signed Kelley Lynch
MOTION EXHIBIT B
Exhibit B: Schedule of Corporations
SCHEDULE
OF CORPORATIONS
INSERTED
INTO MAY 15, 2006 DEFAULT JUDGMENT
BLUE MIST TOURING
COMPANY, INC.
(FORMERLY LC
PRODUCTIONS, INC.
Data is updated to the California Business Search on
Wednesday and Saturday mornings. Results reflect work processed through Friday, July 24, 2015.
|
Entity Name:
|
BLUE MIST TOURING COMPANY,
INC.
|
|
Entity Number:
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C1854203
|
|
Date Filed:
|
03/18/1993
|
|
Status:
|
SOS/FTB FORFEITED
|
|
Jurisdiction:
|
DELAWARE
|
|
Entity Address:
|
419 N LARCHMONT BLVD STE 91
|
|
Entity City, State, Zip:
|
LOS ANGELES CA 90004
|
|
Agent for Service of
Process:
|
KELLEY LYNCH
|
|
Agent Address:
|
1044 S KENISTON AVE
|
|
Agent City, State, Zip:
|
LOS ANGELES CA 90019
|
|
THIS IS NOT A STATEMENT OF GOOD
STANDING
|
|||
|
2164620
|
06/23/1988
(mm/dd/yyyy) |
||
|
BLUE
MIST TOURING COMPANY, INC.
|
|||
|
CORPORATION
|
GENERAL
|
||
|
DOMESTIC
|
State:
|
DE
|
|
|
|
|||
|
Name:
|
THE
CORPORATION TRUST COMPANY
|
||
|
Address:
|
CORPORATION
TRUST CENTER 1209 ORANGE ST
|
||
|
City:
|
WILMINGTON
|
County:
|
NEW
CASTLE
|
|
State:
|
DE
|
Postal Code:
|
19801
|
|
Phone:
|
(302)658-7581
|
||
https://delecorp.delaware.gov/tin/controller
TRADITIONAL HOLDINGS,
LLC
General Information
|
|
Organization
Number
|
0507175
|
|
|
Name
|
TRADITIONAL
HOLDINGS, LLC
|
|
|
Profit
or Non-Profit
|
Unknown
|
|
|
Company
Type
|
KLC -
Kentucky Limited Liability Company
|
|
|
Status
|
I -
Inactive
|
|
|
Standing
|
B - Bad
|
|
|
State
|
KY
|
|
|
File
Date
|
12/18/2000
|
|
|
Organization
Date
|
12/18/2000
|
|
|
Expiration
Date
|
12/30/2050
|
|
|
Last
Annual Report
|
9/3/2003
|
|
|
Principal
Office
|
3141
WARRENWOOD WYND
LEXINGTON, KY 40502 |
|
|
Managed
By
|
Managers
|
|
|
Registered
Agent
|
RICHARD
A. WESTIN
3141 WARRENWOOD WYND LEXINGTON, KY 40502 |
Current Officers
|
|
Member
|
|
|
|
Member
|
Individuals / Entities listed at time of
formation
|
|
Organizer
|
Images available online
|
Documents
filed with the Office of the Secretary of State on September 15, 2004 or
thereafter are available as scanned images or PDF documents. Documents
filed prior to September 15, 2004 will become available as the images are
created.
|
|||||
|
|
10/21/2003
|
1
page
|
|||
|
|
11/21/2002
|
1
page
|
|||
|
|
4/30/2001
|
1
page
|
|||
|
|
12/18/2000
|
24
pages
|
|||
Activity History
|
|
Filing
|
File
Date
|
Effective
Date
|
Org.
Referenced
|
|
|
Admin Dis. A. report not in
|
11/9/2004
|
11/8/2004
|
|
|
|
Add
|
12/18/2000
12:51:00 PM
|
12/18/2000
|
Administrative Dissolution 11/9/2004
1 page
Annual Report 10/21/2003 1 page
Annual Report 11/21/2002 1 page
Annual Report 4/30/2001 1 page
Articles of Organization 12/18/20002
1 pages
https://app.sos.ky.gov/ftshow/(S(upqhqlyb52ux32ui1mqwp2jp))/default.aspx?path=ftsearch&id=0507175&ct=06&cs=99999
OLD IDEAS, LLC
Data is updated to the California Business Search on
Wednesday and Saturday mornings. Results reflect work processed through Friday, July 24, 2015.
|
Entity Name:
|
OLD IDEAS, LLC
|
|
Entity Number:
|
201112410233
|
|
Date Filed:
|
04/26/2011
|
|
Status:
|
ACTIVE
|
|
Jurisdiction:
|
DELAWARE
|
|
Entity Address:
|
9300 WILSHIRE BLVD STE 200
|
|
Entity City, State, Zip:
|
BEVERLY HILLS CA 90212
|
|
Agent for Service of Process:
|
ROBERT KORY
|
|
Agent Address:
|
9300 WILSHIRE BLVD STE 200
|
|
Agent City, State, Zip:
|
BEVERLY HILLS CA 90212
|
|
THIS IS NOT A STATEMENT OF GOOD
STANDING
|
|||
|
3823329
|
06/30/2004
(mm/dd/yyyy) |
||
|
OLD
IDEAS, LLC
|
|||
|
LIMITED
LIABILITY COMPANY (LLC)
|
GENERAL
|
||
|
DOMESTIC
|
State:
|
DE
|
|
|
Name:
|
PARACORP
INCORPORATED
|
||
|
Address:
|
2140 S
DUPONT HWY
|
||
|
City:
|
CAMDEN
|
County:
|
KENT
|
|
State:
|
DE
|
Postal Code:
|
19934
|
|
Phone:
|
(302)697-4590
|
||
Kelley
Lynch
1754
N. Van Ness Avenue
Hollywood,
California 90028
Telephone: 323.331.4250
In
Propria Persona
SUPERIOR
COURT OF THE STATE OF CALIFORNIA
COUNTY OF
LOS ANGELES
LEONARD
COHEN, an individual, Case
No. BC338322
Related
Case No. BC 341129
Plaintiff [PROPOSED]
ORDER
vs. TO
TAX, REDUCE AND/OR
STRIKE COSTS
KELLEY
LYNCH, an individual
Hearing & Time: 10.06.2015
8.30 AM
Defendant Civil Petition
filed: May 25, 2011
ORDER OF COURT
The motion of the
Defendant for an order of striking the Memorandum of Costs and/or taxing the
additional post-judgment interest and vacating the Memorandum of Costs heretofore
entered was heard by the court on October 6, 2015. Defendant Kelley Lynch appeared in propria
persona; Plaintiff Leonard Cohen was represented by Kory & Rice and Bergman
Law Group.
Dated: 27
July 2015
_______________________
Judge of the Superior
Court
