From: Kelley Lynch <kelley.lynch.2010@gmail.com>
Date: Sun, Nov 23, 2014 at 2:45 PM
Subject: Re:
To: IRS cc: Multiple Recipients
Hello IRS,
I have also reviewed this testimony with you ad nauseum. Later testimony proved that Cohen's lawyers are on retainer that so that makes his testimony particularly interesting. Streeter doesn't like the idea that Cohen's witnesses are paid lawyers. She will excuse this away in Closing. Normally it's relevant but, according to Streeter, this is an unusual case. And, please keep in mind that I witnessed her on the phone gushing about Leonard Cohen, how calm he was, etc. It was and remains nauseating. Cohen's lawyers testified that they were indeed paid witnesses which is mind-boggling. I intend to ask both courts (in my motions) to recuse Michelle Rice since she is also a paid witness and that is a serious conflict of interest. She is attorney of record in the fraud TRO matter and co-counsel in the motion to vacate matter. Rice has, as I've noted, made "partner" targeting me, lying about me, and serving as Cohen's paid witness lawyer. She will do and say anything from what I can tell.
Cohen testified that he asked (about TH): Is it safe and is it legal? What is he talking about? Is what legal? The corporate structure or annuity agreement? I never once heard him ask this question. Cohen testified that a mistake was made, re. my ownership interest in that structure evidently, and rectified by Westin. I have no idea what mistake was rectified. Westin paid him a substantial amount for that mistake. However, IRS has not received amended or new tax returns re. TH (and other entities) since Cohen received the default (in a matter where I was not served). Nothing was rectified with respect to the federal tax returns or the K-1s and other tax documentation and information transmitted to IRS, FTB, State of Kentucky and others. The articles of organization were not amended either. And, it does not appear that state tax returns were amended. So, whatever was amended was between Cohen and Westin and that has nothing to do with me. This happened after Cohen and I parted ways, I have no idea what the issues are, Westin represented Cohen (I provided him with a very limited POA to form the entity), and this raises very serious issues related to federal and state tax returns and corporate matters. In essence, Cohen testified that he is the alter ego, engaged in self-dealing, the tax returns are evidence of fraud, and he was paid for this by Westin. Cohen testified that he took funds from TH accounts. He didn't testify that his loans and expenditures totaled approximately $6.7 million that he owes, per the Annuity Agreement he signed, with 6% interest. That brings TH assets to approximately $10 million. Streeter simply disregarded Cohen's testimony, and you will see this when she questions me, and from what I can tell, she is indeed attempting to sabotage IRS. And yes, my public defender advised me that he personally felt the City Attorney attempted to sabotage IRS; wanted to discredit me; DA did not want the Spector verdict overturned; he felt there was a possible prosecution plant on my jury; and the jurors relied on Streeter's false line of questioning re. TH assets, wanted to hear from IRS, etc.
The sidebar is absurd. There are mini-trials here and they involve the IRS and Phil Spector. I didn't steal or misappropriate anything and the Public Defender's Office refuses to present me with the Motion in Limine and I assume there are serious problems with that document. Leonard Cohen is the thief and the tax fraud seems egregious. Cohen wasn't running low and TH assets are not his. He had just received $1 million advance; pursued the lithograph deal I was negotiating; planned to tour and was contractually obligated to do so; and was pursuing a third IP deal that he demanded. In the fall of 2004, Cohen understood I planned to go to the IRS over these matters. My lawyers' October 27, 2004 letter to Westin sets forth the issues we were addressing at that time: my ownership interest in those entities and any tax liability. Cohen and Westin evaded their calls for over a week or so and then Cohen came up with a novel defense - to falsely accuse me of receiving overpayments for my fees as his personal manager and willfully disregard all corporate books, records, stock units, tax returns, etc. Please see Greenberg's cover-your-ass "IRS Warning" letters re. Cohen's dangerous level of borrowing from this entity and the minutes Westin prepared on behalf of his client addressing his dangerous level of borrowing from this entity.
I have no idea what is being discussed at the sidebar. It sounds insane. Cohen and Kory engaged in a conspiracy and extortion attempts. Greenberg addressed that in his lawsuit. See the Schedule I am preparing acknowledging what I agree with in the Amended Complaint. I documented this information for Boies Schiler - NOT Neal Greenberg. See all emails between me and Boies Schiller. They absolutely advised me that Cohen/Kory were attempting to engage me in criminal conduct; suggested that I go wired (by Brian Bennett) to my meetings with Cohen/Kory, and assured me that taping them would not be illegal as they were attempting to engage me in criminal conduct. That is precisely what I thought including insurance fraud.
Streeter advises the Court that there is an IRS holding re. the default. There is not, no evidence has presented, and the IRS binder merely contained Kory's letters defending his client; acknowledging that Agent Sopkos' email was a game changer, confirming that Agent Tejeda/IRS had to remain open to these allegations, and it also contained information re. Cohen's fraud IRS refunds from December 2005. They, and the tax returns related to those refunds, have been challenged as fraud with IRS and FTB.
Can IRS explain what any of this has to do with the Boulder order that Pauette, I - and others - were repeatedly told expired in February 15, 2009? Or, the fraudulent "domestic violence" order? Why does Cooley have at least two investigators in the courtroom? Perhaps Phil Spector would like to weigh in on the situation.
All the best,
Kelley
P.S. See attached. I need to revise this slightly. [Schedule re. Neal Greenberg Amended Complaint]
PD: Now, you also have attorneys now, correct? You’ve hired some attorneys? You have attorneys, correct? Cohen: Yes, Sir. PD: And what are their names? Cohen: Their names are Robert Kory and Michelle Rice. PD: Okay. Now, how long have they been your counsel? Cohen: Have they been – PD: How long have they been your attorneys? Cohen: Since – Mr. Kory has been my attorney since 2004 – PD: Okay. And – Cohen: -- And Ms. Rice since 2005, I believe. PD: Would it be fair to say that your professional relationship has also become a personal relationship with these attorneys? You’re friends with them? Cohen: I try to be friendly with all my relationships. PD: Okay. And you actually have an office in the same building, correct? Cohen: Yes, Sir. PD: How much do you pay your attorneys? Streeter: Objection; relevance. Court: Sustained. PD: Your Honor, may I be heard? Court: No. PD: You’re aware that your attorneys are witnesses in this case, correct? Cohen: Yes, Sir. PD: Are they being paid for their time in Court? Streeter: Objection; relevance. Court: Overruled. Cohen: I don’t know. Are they being paid to come here? PD: Yes. Cohen: I don’t think so. PD: Okay. And you said you don’t know. Why did you say you don’t know. Cohen: Well, I don’t know. But I assume that they’re not being paid. PD: Okay. But, again, you don’t know? Cohen: Correct. PD: Now, do they seek your approval in acting on your behalf for all that they do or do you kind of give them leeway? Cohen: No, they always discuss the matter with me. PD: Okay. Have you talked to your attorneys about testifying? Cohen: Not since the trial began. PD: And prior to your testimony, did you talk about what your testimony would be and how you would testimony. Cohen: No, not what my testimony would be. No, not at all. RT 283-285
PD: Now I want to talk to you about this issue in 2004. You had a financial crisis, correct? Cohen: That’s right, Sir. PD: And you – you had a company that’s called Traditional Holdings, correct? Cohen: Correct. PD: Now, this company, you created this company before you sold copyrights to Sony, correct? Cohen: I don’t know. PD: Okay. Do you know why you created this company? Cohen: No, not really. PD: Okay. SO you had no involvement with the creation of the company? Cohen: It wasn’t – it was – it was created in some – some tax purposes. I asked two questions when it was created. I asked: Is it legal and it is safe? PD: And what were the answers to those questions? Cohen: The questions’ answers were yes and yes. But, Sir, all these matters – PD: Objection; no question pending. Court: Just wait for a question. PD: Now, you agree with me that you created this company, Traditional Holdings, for tax purposes, correct? Cohen: I don’t know, Sir. It was created and I asked two questions concerning the creation. PD: Okay. Now, you were aware that 99.5% of that company was owned by Ms. Lynch, correct? Cohen: That was a mistake and it was rectified by the lawyer who drew up the papers. And in arbitration a substantial sum of money was awarded me for his mistake. PD: And that lawyer’s name? Cohen: Richard Westin. PD: And you had arbitration with him? Cohen: That’s correct. PD: And when did you have that arbitration? Cohen: I don’t remember the exact date. I think it was perhaps 2007. PD: Now, you learned in 2004 that your – that the account – that Traditional Holdings account, the money – that you were running low, correct? Cohen: It was running low – PD: That funds in that account, that Traditional Holdings account, they were running low, yes or no? Do you remember that? Cohen: I - I discovered that they were being dissipated. PD: Okay. Now, you panicked correct? Cohen: I was concerned, yes. PD: And in fact you had actually taken money from that account to buy homes, correct? Cohen: Yes, I had. PD: You took money from that account to buy a house for your son, correct? Cohen: That’s correct. PD: To buy a house for your girlfriend? Cohen: Yes. Kelly: Okay. So you -- it’s fair to say that you did take money from that account? Cohen: That’s correct, Sir. PD: You were aware enough about that account to know that you could take money from that account? Cohen: That’s correct. PD: Now, isn’t it true that – well, before I go there, do you blame – well, you actually had a financial consultant who invested the money in that account, correct? Streeter: Objection; relevance. Court: Let me see counsel at sidebar. RT 285-288
Court: Okay. We’re outside the presence of the jury. What is – Ms. Streeter last challenged the relevance. What is the relevance? PD: Your Honor, it goes to two things; first, I think it’s relevant because it goes to bias. It goes to his bias against my client. He’s already testified about issues regarding that account and what he believes caused the accounts to go down. That’s first. Second of all, I do believe it goes to character for truthfulness. I have a good faith believe that – and this is based on federal court documentation – that there was an attempted conspiracy to point blame to someone who wasn’t at fault. Court: I’m not going to get into a retrial of the civil issues between Ms. Lynch and Mr. Cohen so I’m not going to let you go very far into the extent of the business dealings. You made a motion very early on, which I in limine granted, to ask him to not get into the allegations of stealing, and I didn’t want to have this turn into a big trial about the relationships. The issues in this trial are whether a protection order was violated and whether annoying and harassing phone calls were made. Streeter: If I could just expound a bit on the Court’s position. The concern the People have that if you do get into the side issue, as the Court has mentioned, it becomes a mini trial and then the People are put in a situation where either we don’t ask appropriate questions based on that or we do. And then that will lead to further – the People asking more questions of the person in particular that was responsible for getting the default judgment in the holding of the IRS, which was Mr. Kory. And I think that’s part of the documents that Mr. Kelly is talking about; because the information the People have is the exact opposite. So I’m concerned about getting too far afield that it will end up being a mini trial. PD: If I may be heard. With respect to the motion in limine, the motion in limine was to the phrase “stole” or “misappropriated” couldn’t be used unless a foundation was established for it. It wasn’t to going into any back history. Court: It doesn’t matter what the back history was. PD: That being said, I do think what does matter if there’s any character for truthfulness if it shows that Mr. Cohen attempted to lie, I have a good faith belief that this information – Court; I’m not going to – that’s just much too complicated an issue to get into on credibility, so I’m just not going to allow it … I’ll take them on a question-by-question basis, but I’m not going to allow the pending question. PD: Okay. RT 288-290
DRAFT SCHEDULE – FINAL DOCUMENT WILL BE SIGNED.
SCHEDULE OF
FACTUAL ALLEGATIONS & STATEMENTS
NEAL GREENBERG AMENDED COMPLAINT
I, Kelley Lynch, agree with the following factual statements and was
a witness to much of what was addressed in Neal Greenberg’s Amended Complaint
(Denver District Court, Case No. Case 1:05-cv-01233-LTB). Therefore, Neal Greenberg and I are in
agreement with respect to the following facts.
See Neal Greenberg Amended Complaint & Exhibits attached hereto and
made a part hereof. Kelley Lynch opposes
all statements raised in Greenberg’s Complaint and not contained in the
following excepts taken directly from the Amended Complaint. See Amended Complaint
attached hereto and made part hereof.
Dated: 23 October 2014
___________________________________
Kelley Lynch
Neal Greenberg. Vs. [HEADING]
Denver District Court, Case No. Case 1:05-cv-01233-LTB
Judge Lewis Babcock
Defendant Leonard Cohen (“Cohen”), a noted recording artist,
acting directly on his own behalf, and through his agent and attorney, Robert
Kory (“Kory”), has threatened to take or has taken, improper and unlawful
actions, including bribery and
intimidation of a witness, subornation of perjury, defamation …
Cohen’s extortion scheme
was eventually exposed by Lynch and ultimately frustrated …
Cohen has made clear that he asserts rights over certain
investment funds that belong to Traditional Holdings, LLC (“Traditional
Holdings”), a dissolved Kentucky entity that was managed and 99.5% owned by
Lynch and 0.5% owned by Cohen.
From the early 1990s, impressed with a new strategy used by
other Hollywood celebrities to cash in on their future revenue streams from IP
rights and increase short-term income (called a “Pullman
or “Bowie” bond, after the artist David Bowie who first used it), Cohen … worked aggressively with advisors, including Greg McBowman, to auction off portions of his IP to the highest bidder.
or “Bowie” bond, after the artist David Bowie who first used it), Cohen … worked aggressively with advisors, including Greg McBowman, to auction off portions of his IP to the highest bidder.
Lynch arranged for Cohen to have a first meeting with Greenberg
in 1996 to discuss Cohen’s investment options for the proceeds from the
anticipated First Sony Sale.
During this meeting, and at Cohen’s request, Greenberg suggested
ways in which Cohen could structure the investment of his proceeds from the
First Sony Sale so as to reduce tax consequences and generate substantial
income.
Cohen worked with, and began to be represented by, a creative
tax attorney and law professor from the University of Kentucky, Richard Westin
(“Westin”). Cohen also had other
advisors and consultants working with Lynch on his business, music and tax
matters, including Greg McBowman … Ken Cleveland, as well as Stuart Fried and
other attorneys at the law firm of Grubman Indursky & Schindler, P.C.
Ultimately, Cohen decided to transfer some of the income from
the First Sony Sale into charitable remainder trusts. On October 30, 1996,
Cohen established three trusts: the Sabbath Day Charitable Trust (the
"Sabbath Day Trust"), the Cohen Family Charitable Trust (the
"Cohen Family Trust"), and the Cohen Remainder Trust (the
"Remainder Trust") (collectively, the “Trusts”).
Cohen … repeatedly withdrew large amounts of the Trusts’ assets.
On repeated occasions, TAS notified Cohen (both directly, when possible, and
per instruction through Lynch) that Cohen was spending more than recommended
from the Trusts, and thus, was draining down the Trusts’ principal.
On one such occasion, on April 13, 2001, Greenberg, on behalf of
TAS, wrote to Cohen: “I am writing to
you to discuss the income withdrawals you’ve received from your portfolio and
to provide you with some helpful guidelines for the future. When we originally
constructed your portfolio in 1997, you may remember that we had extensive
conversations about how much you required for your annual living expenses.”
In or about 1999, Cohen put more of his IP up for auction. In
1999, Sony and Cohen … negotiated for a second sale of IP to Sony for about $8
million (the "Second Sony Sale"). The artist royalties to be sold were
represented by Cohen as being held by another … entity, Blue Mist Touring Co.,
Inc. ("Blue Mist"). Cohen was
the Chairman, President, and majority shareholder of Blue Mist, owning 425
shares, while Lynch was the Assistant Secretary and minority shareholder of
Blue Mist, owning 75 shares, or 15% of the company.
Cohen asked Westin, and in the spring of 2000, Greenberg, to
provide advice about how to invest the anticipated proceeds from the Second
Sony Sale and minimize the sale’s tax burden.
Cohen leapt at this opportunity to minimize his tax burden [via
Traditional Holdings, LLC], just as he had explored all possible means of
reducing his taxes in years past, such as by seeking a tax credit for donating
his papers to a Canadian museum [University of Toronto], and using artifices in
dealing with Sony to avoid paying any Canadian taxes (as a Canadian citizen) on
his royalty income earned in Canada.
Westin’s proposed plan had the following basic components: a
limited liability company – which eventually became Traditional Holdings –
would be created. Blue Mist would transfer certain IP assets to Traditional
Holdings in exchange for a deferred annuity, to be paid to Cohen beginning in
about 10 years. Traditional Holdings would then sell the assets it received
from Blue Mist to Sony. The tax plan prevented Cohen, the annuitant, from
owning more than a de minimis interest in Traditional Holdings. Therefore, Cohen would own less than 1%, and
another person – who ultimately was Lynch – would own the remaining LLC
interest (more than 99 percent).
Westin outlined this proposal to Cohen and Lynch both orally and
in a series of letters and other written communications between October 2000
and December 2000. See, e.g., Exh. 1 attached.
In these written communications, Westin explicitly warned Cohen
that since the annuity plan gave significant transactional control to Lynch,
and also potentially placed tax and other burdens upon her as majority
shareholder, the plan would work only if Cohen and Lynch maintained (as they
had in the past) a long-term relationship of personal and professional trust
which would secure their mutual obligations as manager of the obligor (Lynch)
and annuitant (Cohen). See, e.g., Exh. 2 attached.
Cohen carefully reviewed, understood, and signed off on the
ownership structure of Traditional Holdings – including the fact that Lynch
would own 99 percent of Traditional Holdings’ membership interests, so as
(among other reasons explained by Westin) to avoid any suggestion of
self-dealing.
First, Cohen reviewed the Traditional Holdings Articles of
Organization, and reviewed and executed the Traditional Holdings Operating
Agreement, which set forth in detail the entity’s ownership structure and
managerial procedures. See Traditional Holdings Articles of Organization and
Operating Agreement (Exh. 3 attached).
Second, Cohen participated, at his request, in conference calls
with Westin and Lynch and/or Greenberg during which the structure was carefully
reviewed.
Third, Cohen talked about the structure of Traditional Holdings
privately with Lynch, including when he forced her to discuss it with him while
he took a bubble bath.
Fourth, in addition to several explanatory faxes he received
from Westin describing Traditional Holdings, Cohen communicated specific
questions, through Lynch, relating to Traditional Holdings’ ownership and
transactional structure, which questions Westin answered in a letter written
directly to Cohen on December 4, 2000, and faxed (as with his prior memos)
directly to Lynch and Cohen. See, Exh. 2.
Moreover, regardless of whether Lynch owned 1 percent or 100
percent of the shares of Traditional Holdings, Cohen knew or should have known
that she had or came to have authority – through a durable power of attorney
and pursuant to her role as Traditional Holdings’ manager – to act, and give
directions, on Traditional Holdings’ and on his own behalf. See, e.g., Exh. 3.
Likewise, no matter who owned the majority of shares of
Traditional Holdings, the obligation to fulfill a deferred annuity obligation
to Cohen remained the same. Thus, Cohen's interests in the firm (the long term
annuity payments) were identical, no matter how his purported ownership
interest in the assets were held and invested in the interim.
In December 2000, Westin created Traditional Holdings as a
Kentucky limited liability company. Lynch was named as the initial manager in
the Articles of Organization, and both Cohen and Lynch were appointed as managers
in the Operating Agreement. Id. Also in December 2000, Cohen signed a Private
Annuity Agreement with Traditional Holdings which document sets forth
Traditional Holdings’ annuity obligations to Cohen. See, Private Annuity
Agreement (Dec. 7, 2000) (Exh. 4 attached). Lynch signed the Private Annuity
Agreement on Traditional Holdings’ behalf. Westin maintained, and continues to
maintain, that the company and its annuity contract with Cohen are legitimate
under prevailing interpretations of the federal tax code.
To purchase her ownership interest in Traditional Holdings,
Lynch was required to submit to Traditional Holdings a promissory note for
$240,000. It was agreed that Lynch would receive a salary and/or distributions
from Traditional Holdings sufficient to pay down the $240,000 promissory note
and to cover tax liabilities. See, Exhs. 2 and 3.
As set forth in the Operating Agreement, Traditional Holdings
was authorized to issue loans to its members, Cohen and Lynch, as long as the
loans were paid back before the annuity obligations commenced. See, Exh. 3.
In April 2001, the Second Sony Sale was completed. The gross
proceeds of the Second Sony Sale were approximately $8 million, less certain
identified costs, expenses, and holdbacks for undelivered work.
Of these proceeds, Cohen had already requested and received $1
million as an advance in November 1999. Cohen was well aware of this $1 million
advance because it became the subject of a tax dispute with the Internal
Revenue Service in 2002.
Of the remaining proceeds of the Second Sony Sale, [certain]
amounts were paid to cover the costs involved in closing and negotiating the
Second Sony Sale:
$350,000 Grubman Indursky & Schindler, P.C. (attorneys for
Cohen)
$333,750 McBowman Consulting Group (consultants for Cohen)
$30,450 Epstein Backer & Green, P.C.
$1,101,250 Stranger Management (commissions to Lynch's company)
Kelley Lynch comments in
bold: The following amounts, as
confirmed in Cohen’s Complaint, should have been fully addressed in Neal Greenberg’s
Amended Complaint. Cohen’s Complaint,
Clause 61, confirms that transaction fees related to the 1st and 2nd
Sony deals totaled approximately $4.7 million and listed the following amounts:
$1.2 million – Stranger
Management
$350,000 – legal fees
(Grubman, Indursky firm)
$350,000 – consultant
fees (Greg McBowman)
$500,000 – for federal
income taxes and penalties due on Sony’s $1 million advance paid on the sale in
1999.
$100,000 – Richard
Westin legal fees
$200,000 – Leonard
Cohen’s settlement fees re. failed CAK bond deal
Additionally, Cohen
withdrew approximately $592,000 as a “shareholder loan” from the Traditional
Holding account to purchase homes for his son and girlfriend. The Greenberg Complaint confirms that
$2,084,518 belonging to Traditional Holdings, LLC was deposited into Leonard
Cohen’s account. Leonard Cohen also
personally received $1 million advance on the Traditional Holdings, LLC 2001
sale and failed to transfer this amount to the corporate entity. The above expenses, loans, income and
deposits total: $6,376,518.00. In addition to this, a Promissory Note was
prepared and signed by Leonard Cohen.
That Promissory Note addressed an additional approximate amount of
$355,000 Leonard Cohen owed Traditional Holdings bringing the total to: $6,626,518.00 with interest in the amount of
6% per annum.
None of these listed expenses had anything to do with either the
formation of the annuity plan or
with Traditional Holdings’ dealings … Westin did receive a
modest fee for his work on the Traditional Holdings documents, and for
consulting with Sony on Cohen and Traditional Holdings’ behalf.
Agile Group [sent] official monthly statements to Cohen at the
Larchmont Address (the record address for Traditional Holdings) setting forth
the performance of the Traditional Holdings’ funds invested in the Agile Safety
Fund. See, e.g., Exhibit 6 (example of monthly statements sent by independent
outside administrator). In addition, Agile Group, LLC sent monthly letters to
Cohen which, as a courtesy, summarized the deposits into and withdrawals from
the Agile Safety Fund by Traditional Holdings. Id. (example of monthly
summaries sent by Agile Group, LLC).
No sooner had Traditional Holdings been funded, however, than
Cohen – just as he had done with the Trusts’ assets from the First Sony Sale,
and notwithstanding Greenberg’s prior warnings about draining down investment
money – began to dissipate the Traditional Holdings funds, jeopardizing his own
long-term annuity interests, as well as the company’s legitimacy. Greenberg and
others were immediately alarmed by Cohen's desire and tendency to treat this
company like his own personal piggybank, out of which he could borrow or take
distributions against his annuity benefits.
For example, almost immediately after the funding of Traditional
Holdings, Cohen took out a loan for $50,000. This was followed, during 2001 and
2002 alone, by several loans to Cohen … to cover tax liabilities, houses for
Cohen's son and his current girlfriend, and living expenses. These 2001-2002
loans to Cohen –amounting to over $1 million – were deposited directly into
Cohen’s personal bank account at City National Bank in Beverly Hills,
California.
In March 2002, Greenberg [spoke to] Cohen directly by telephone,
Cohen “admitted he was spending too much and seemed a little shaken when
[Greenberg] reminded him how much he had just spent on gifts to friends."
Lynch repeatedly assured Agile Group, LLC and TAS that the loans
from Traditional Holdings were being properly documented with Westin’s assistance.
Cohen’s tax attorney, Westin, also was aware of and in regular communication
with Lynch [Cohen, Greenberg, and Cohen’s other representatives] concerning the
shareholder loans and other aspects of the affairs and management of
Traditional Holdings.
The March 5, 2002 Traditional Holdings Board Meeting Minutes,
prepared at Westin’s direction, state “that the level of borrowing was
undesirable and [the members] expressed their assent that further borrowing was
discouraged, even though the borrower’s [Cohen’s] credit and collateral were
good.”
Cohen, however, gave no sign that he had any intention of
abating his spending habits. In an e-mail to Lynch dated March 4, 2002, Cohen
thanked Lynch for “keeping [him] informed,” and instructed her to “give lots of
money to everyone.”
Because these shareholder loans were to be repaid, and because
it was necessary to protect the entity’s integrity for tax purposes, these
shareholder loans were properly characterized, on Cohen’s tax attorney Westin’s
advice, as Traditional Holdings assets when calculating the entity’s value.
Lynch, on Cohen’s behalf, sent e-mails to Colorado in response
to Greenberg’s warnings, defending the loans, giving assurances that all of the
loans were proper and documented, and assuring that they would be paid off when
Cohen received the money from another, upcoming Sony transaction.
In October 2004, Cohen and Lynch had a major falling out, the
details of which remain unknown to Plaintiffs. As a result of this falling out,
the Third Sony Sale – which appeared to be on the verge of consummation – never
happened.
On October 21, 2004, Cohen personally contacted Greenberg by
e-mail and informed him that Lynch was “busy with other aspects of [his]
career,” and therefore, Cohen had “relieved her of all financial
responsibilities.” Cohen further stated that Lynch “need not be copied on your
statements or reports,” and that Cohen's new accountant would “be in
touch.”
On October 22, 2004,
Cohen sent another e-mail to Greenberg stating that Lynch “no longer represents
me,” and directing Greenberg not to “respond to any of her instructions.”
On or about October 24, 2004, Cohen again communicated directly
with Greenberg by e-mail, stating that his business address was no longer the
Larchmont Address or Keniston Address. With allegations flying fast and furious
from Cohen – and later Kory – that Lynch was acting without due authority from Cohen,
remarkably, a request to change Cohen's record address was left on Plaintiffs’
general voice mailbox by Anjani Thomas. Only later did Plaintiffs learn the
identity of Ms. Thomas – Cohen’s current girlfriend, and Kory’s ex-wife. Thus, Plaintiffs demanded an original
signature from Cohen on a document verifying the new address
Given Lynch’s position as manager and 99.5% owner of Traditional
Holdings, and learning of the apparent schism between Lynch and Cohen, Agile
Group, LLC became concerned about whose directions as to the Traditional
Holdings account it was legally obligated to follow. On October 24, 2004, Agile
Group, LLC communicated with Westin – Cohen's attorney who had created
Traditional Holdings – and inquired: “Does Leonard in your view have equal
authority over the accounts that we manage? What if there are contradicting
directive on those accounts that we manage? For example if KL says 'take money
out' and LC says don’t take money, what is your view . . . .” Westin confirmed
that because Cohen held a membership interest in Traditional Holdings, Agile
Group, LLC could share information with him about Traditional Holdings’
investments. Westin could not, however, answer the issue of conflicting
directives, and instead referred Agile Group, LLC to Traditional Holdings'
governing documents (drafted by Westin), which documents provided little, if
any, guidance on the issue.
At or about this same time (October 22-24, 2004), Cohen phoned
Greenberg. Cohen said that he thought Lynch had been taking money from
Traditional Holdings without Cohen's authorization. He claimed that Lynch was
using the money to support a gigolo and
to fund shopping sprees at Neiman Marcus, and suggested that Lynch and Westin
may have colluded to defraud him. When
Greenberg reminded Cohen that Westin had warned Cohen in 2000 that "the
biggest risk" from Westin's tax avoidance plan “was that Lynch would own
his [the] assets and he would have lost control,” Cohen stated that he recalled
that initial warning.
According to Lynch, however, Cohen regularly visited his
management offices, often in Lynch’s presence, and reviewed and discussed his
mail with her, all of which was kept on his desk to facilitate such review,
including all correspondence, reports, and statements from the Agile Safety
Fund’s independent, outside administrators, and from Plaintiffs.
Cohen then turned to his agent and attorney Kory to deal with
Lynch, Westin, and Plaintiffs.
Based on these checks, Agile Group, LLC calculated that, of the
loan money withdrawn from Traditional Holdings:
a. $2,084,518 had been deposited into Cohen’s own personal bank
account;
b. Lynch personally had outstanding loans of approximately
$293,000, which loans she represented had been disclosed to and sanctioned by
Cohen;
Her abrupt termination frustrated Lynch's ability to make good
on any loans through her share of receipts from the Third Sony Sale, the
"Dear Heather" album, a pending sale of original lithographs, or
other sources, and left her in a precarious financial position …
In November 2004, Lynch was asked by [Cohen] to appear without
the benefit of counsel at a meeting with Cohen, Kory, and … Greenberg, Glusker law firm acting as legal
counsel for Cohen, and to sign certain legal documents related, inter alia, to
unwinding Traditional Holdings on the spot [settle with Cohen]. Lynch refused to do so without benefit of
counsel, and subsequently received advice from a variety of legal, accounting
and tax professionals, including but not limited to Mike Taitelman, Dale
Burgess, Dianne DiMascio, and an IRS officer named Betzer, that she was wise
not to sign, because such action could have been fraudulent.
[NOTE: Lynch did not receive this specific advice
from IRS Agent Betzer. Lynch spoke to Agent
Betzer on April 15, 2005 and thereafter about the allegations re. Leonard
Cohen’s tax fraud and numerous corporate entities. Agent Betzer first advised Lynch to bring
this matter into the IRS with an attorney and then later instructed her to
contact the IRS fraud unit.]
Lynch claimed that she had substantial, unsatisfied interests in
Cohen's business entities and/or intellectual property. If Cohen were to
attempt to recover money from Lynch, she would likely assert counterclaims
alleging that Cohen owes her, and has never paid, substantial amounts of money;
and, according to Lynch, and upon information and belief, such possible
improprieties included, but were not limited to, the retention by Blue Mist and
other persons or entities of IP that should have passed through Traditional
Holdings to Sony, the failure to reference or disclose the annuity obligation,
loan obligations, and other important matters on Traditional Holdings’
corporate tax returns, and Cohen’s failure to properly document Traditional
Holdings’ transactions.
Because any attempt to recover money from Lynch was likely to be
both futile and treacherous, Cohen, Kory, and other unnamed co-conspirators
(including Steve Lindsay, Betsy Superfon, and John Doe Nos. 1-25) … conspired
...
Thus, for example, although the attorneys and accountants
involved in the Second Sony Sale structured and received hefty fees for that
transaction, which Kory charged were excessive, Cohen and Kory decided not to
pursue any of those persons because they would not be easy targets, and because
many of them – principally Sony and its law firm and advisors –continued to do
business with Cohen profitably. Instead, Cohen and Kory decided to go after
Plaintiffs, none of whom had any role whatsoever in that Sony transaction
and/or received any benefit therefrom.
[NOTE: In a Memorandum Kory provided to Lynch’s
lawyers, Ira Reiner and Kevin Prins, he raised issues related to fraud in the
inducement against members of the Grubman firm and Greg McBowman. Kory advised Lynch’s lawyers that they were
considering going after Ken Cleveland.
Kory also advised Lynch that she had a cause of action against every one
of Cohen’s representatives and they would assist her with those claims if she
provided testimony against Cohen’s representatives and advisers.]
He [Leonard Cohen] told Greenberg to "be a man" and
contact his insurance company. “Please
do talk to the insurer. A great deal of suffering can be avoided.”
Cohen with affirmative support from Kory, Steve Lindsay and
Betsy Superfon, and John Doe Nos. 1-25, all acting toward a common end and each
for his or her own purposes, began to direct an extortion scheme …
Cohen and Kory indicated that, unless Plaintiffs obtained
insurance funds … Cohen would go out on tour to promote his new album, and would
give interviews to reporters in which he would state or insinuate that he was
touring because he had been bankrupted by the improprieties of his financial
advisors.
Cohen and Kory knew full well that, from Plaintiffs’
perspective, once a celebrity were to raise such allegations of fraud and
breach of duty against them, the damage would already be done, no matter the
ultimate outcome.
Cohen and Kory began to pressure Lynch to assist in the
extortion scheme against Plaintiffs. Specifically, they requested that she
falsely testify … Cohen sought to obtain … testimony from Lynch knowing that
the testimony would be false.
Lynch's cooperation in Cohen’s extortion scheme was critical.
Cohen believed that he could not only use Lynch as a witness against Plaintiffs,
but could also buy or coerce her silence as against himself at the same time.
Thus, Cohen pressed for private "mediation" as an
alternative to a public lawsuit, knowing full well that with Lynch's
cooperation and silence, many of the critical documents concerning Cohen's
financial affairs – documents that indubitably show … his aggressive tactics to
avoid taxes at all costs, and his desire to capitalize on and benefit from all
of his intellectual property during his lifetime to fuel an extravagant
lifestyle – would not be the subject of discovery
Thus, by deliberate misrepresentations and omissions of critical
facts … Cohen could knowingly and deliberately misrepresent his objectives and
sophistication as an investor, his long history of aggressive tax management,
his long history of exploitation of his IP for immediate gain and profit, his
profligacy …
For example, Cohen affirmatively misrepresented to Plaintiffs
that Lynch had simply forged his signature on various documents, knowing full
well that she had not done so, or had signed with his full authority (as borne
out by his subsequent actions – such as purporting to state claims based on
agreements with TAS bearing his signature, and revoking a power of attorney
bearing his signature that he acknowledged executing).
Cohen likewise falsely asserted that at no time had he
authorized any of the shareholder loans from Traditional Holdings, and made
various accusations against Lynch for which he had no basis in fact …
As one example, he claimed never to have known, prior to
November 2004, that Lynch was the majority shareholder of Traditional Holdings,
thereby implying that he had been deceived by Plaintiffs and Westin. He also denied receiving information about
Lynch's role as managing the obligation to pay his annuity, and denied ever
receiving any information from Plaintiffs other than some monthly email
summaries, even though he was easily able to retrieve Plaintiffs’ other written
warnings, reports and correspondence from [Lynch’s] own Keniston office address
in 2004, and was reported by Lynch to have regularly visited the office,
reviewed his mail, and discussed Traditional Holdings' loans and his other
accounts with her on a regular basis.
In particular, starting in March 2005, Cohen began to assert
that Plaintiffs were responsible for the loss of $8 million, which figure
included many
millions of dollars which they knew Cohen had, in fact,
received and previously spent in support of his own extravagant lifestyle.
… according to Lynch and others, he was prepared to admit or
agree with Lynch that she owed Cohen nothing.
Having garnered the support of Lynch's then-attorney, Dianne
DiMascio (“DiMascio”), Cohen felt
confident enough in January 2005 to misrepresent to Plaintiffs’
counsel, through Kory, that Lynch was then of the view that she, along with
Cohen, was a victim of the misconduct of Plaintiffs and Westin.
Cohen and Kory continually sought to purchase or coerce Lynch’s
cooperation
In a demand letter from Kory to DiMascio, Kory wrote: I want to reemphasize my position that I am
willing to work with you as part of a settlement between Mr. Cohen and Ms.
Lynch in going
after Westin’s and Greenberg’s insurers as a source of restitution.
Thereafter, on January 11, 2005, Kory wrote to DiMascio, telling
her that [Ira Reiner believed] “properly framed letters to Greenberg and to
Westin would cause their insurance companies to show up.”
Lynch declined to attend the meeting in person. Instead,
DiMascio went to the meeting on Lynch’s behalf in early February 2005, after
which she reported to Lynch: “[Cohen and Kory] want your cooperation in pursuing [the
Plaintiffs] and Richard Westin. In this regard, they seem to want you
to acknowledge that you knew that Neal [Greenberg] and Richard
[Westin] wanted to defraud Leonard and that you approved their conduct.”
Repeatedly, from at least November 2004
through April 2005, Kory made known
to Lynch, directly, through counsel,
through Steve Lindsay (the father of Lynch’s youngest child
and one of Cohen’s record producers),
through Lynch’s accountant Dale Burgess, through
accountant Mike Taitelman, and through
others among her friends and relatives, that he had
extraordinary negotiating authority from
Cohen to "forgive" any obligations of Lynch, to treat
them as a gift, to make additional payments
to her or her family members (including disguised as
"palimony" on the pretext that
Cohen is the father of one of her children), to make good on
Lynch's shares of IP rights or legal
entities, or even to dedicate a hefty percentage to her of
whatever funds could be extorted from
Plaintiffs and other advisors with her cooperation.
Kory tried to do this directly in late spring 2005 when he met
Lynch for lunch and tried to persuade her to work with Cohen to “go after”
Plaintiffs [and all of Cohen’s representatives].
Cohen and Kory also worked indirectly. For example, they recruited Lynch’s erstwhile
friend and longtime “friend” of Steve Lindsay, Betsy Superfon, a person of some
notoriety due, among other reasons, to her entrepreneurship in the telephone
sex trade. On numerous occasions, Kory [and Cohen] used Lindsay and Superfon to
try to “broker” deals with Lynch …
In one such conversation, in May 2005, Superfon, according to
Lynch, called Greenberg “the kingpin” and a “criminal” and pleaded with Lynch
to cooperate with Cohen for “[her] heart, [her] health, and [her] kids” and
recommended that Lynch “get out of this.”
Superfon promised that she could “settle this for [Lynch] immediately,”
and stated that “Leonard and Kory [are] trying to get you out of this situation.”
When Lynch requested a settlement agreement in writing during a
later conversation, Superfon, according to Lynch, stated that when she asked
Kory to fax Lynch a settlement, Kory said “you can’t fax this kind of a deal.
It has to be discussed.” [Superfon
advised Lynch that she personally believed the deal they were offering was
illegal.]
Through Lindsay, Superfon and other friends, relatives and
acquaintances, Cohen and Kory delivered the message that giving in to Cohen’s
wishes would be in Lynch’s best interest.
When these tactics to draw Lynch into his extortion scheme
proved futile, Cohen and Kory – according to Lynch – turned to far more
aggressive means to obtain her cooperation.
Indeed, as heard by other witnesses, Cohen and Kory vowed to “crush
her,” and planned to use restraining orders and other means to prevent her from
serving as a credible witness regarding both Cohen's affairs and in regard to
the scheme into which they had tried without success to draw her.
Consistent with that vow and plan, and according to Lynch and
other witnesses, and on information and belief, Cohen and Kory's tactics to
terrorize, silence, or disparage Lynch have included, inter alia, the
following:
a. contacting City National Bank, where Lynch, Lynch’s son ..,
all had personal banking accounts, and convincing City National Bank to put a
freeze on … their accounts;
b. alleging that Lynch's father and mother were depositing funds
for Lynch in secret offshore bank accounts … ;
c. threatening Lynch that she would go to jail if she did not
cooperate, and having her younger son's father, Steve Lindsay, who was also
Cohen’s record producer, repeat these threats in the child's presence;
d. threatening to “go to child services,” encouraging Steve
Lindsay to file legal action to remove Lynch’s younger (and his) son from her
custody, and submitting affidavits (from Kory and Superfon) supporting that
effort;
e. in a coordinated fashion with Lindsay’s child custody
petition, encouraging or directing Steve Lindsay to call in a warning to the
LAPD (not related to Traditional Holdings, but on some other, unknown pretext)
that caused a police team to descend, guns drawn, on Lynch's home, resulting in
her being handcuffed and taken involuntarily, in her bathing suit, to a hospital
psychiatric ward and medicated without her consent, before being released the
next day, during which time Kory attempted to persuade Lynch’s older son,
Rutger, to sell Lynch’s house and provide $3 million; and
f. paying two paroled convicts to make [false] statements [about
Lynch’s older son].
These and other tactics brought Lynch to the point of … financial
ruin.
Cohen’s scheme to force Plaintiffs into a contrived mediation
without discovery or publicity might have succeeded, had not Lynch refused to
cooperate. Instead, she made the unilateral decision to provide to Plaintiffs'
legal counsel a variety of documents and other information that they might not
have otherwise seen … See, e.g., Facsimile Message from K. Lynch to S. Posel
(March 17, 2005) (Exh. 11 attached).
Fortunately, Lynch [permitted Boies Schiller to review] not only
historical files, but also the details of Cohen and Kory's illicit offers made
to her through attorney DiMascio, through accountant Dale Burgess, and through
other intermediaries, and shared every detail of Cohen and Kory's attempts to
negotiate with or threaten her in order to obtain … testimony ...
Cohen and Kory continued to heighten their efforts to bribe or
coerce Lynch into giving … testimony … without knowing that Lynch had already
exposed their scheme …
Cohen and Kory alleged that Plaintiffs “proposed the sale of
Cohen's ‘illiquid assets,’ including Cohen's various royalty interests,” and
contended that “Cohen was convinced by [Greenberg] of the financial necessity
to sell off his royalty interests during his lifetime . . . .”
Cohen and Kory alleged that Plaintiffs were liable for “actual damages
of at least $8 million,” which was an amount even greater than the total
proceeds of the Second Sony Sale. In fact, Cohen and Kory made this allegation
with full knowledge that Cohen had already received at least $1 million in
advance of the Sale closing, that the gross proceeds had been reduced by
specific costs and charges, that were well over $1 million had been paid out to
third parties to cover closing costs from the Sale, and that Cohen had received
at least $2 million of the remainder into his own personal bank account.
Cohen reviewed the Traditional Holdings governing documents
(detailing that arrangement), that he repeatedly received and understood both
oral and written explanations of this very fact, and that [Lynch was not]
behind the formation or structure of Traditional Holdings.
Thereafter, on June 3, 2005, Plaintiffs provided Kory, as
promised, a draft complaint … with extensive documentary support … The draft
complaint also revealed to Cohen and Kory, for the first time, that Lynch and
others had already exposed the extortion scheme. In particular, the draft
complaint demonstrated that Plaintiffs were aware of Cohen’s scheme to use
economic compensation, emotional intimidation, and other forms of undue
pressure to coerce Lynch to provide … testimony …
At all relevant time periods stated herein, Kory acted, at a
minimum, as an agent, attorney, joint venturer, and/or co-conspirator of Cohen
…
Cohen and Kory knew that the false, disparaging, and defamatory
press release was not made in furtherance of any lawful objective or within the
scope of the litigation commenced by Plaintiffs, and that the intended
recipients were not involved in or closely connected with the litigation.
As a result of Cohen and Kory’s improper
and unlawful conduct, the false, disparaging and defamatory press release was
immediately published on, inter alia, the following interactive and other
websites:
(a) www.leonardcohen.com
(the official Leonard Cohen website, which
has a link to the chat room for the Leonard Cohen files, where the statement
was published);
(b) http://www.cmumusicnetwork.co.uk/daily/050616.html
(states that “Kory told CMU” and then
quotes the Cohen and Kory press release);
(c) http://xrrf.blogspot.com/2005/06 leonard-cohen-mr.-big.html (referencing the quoted statement as “released by Leonard Cohen’s lawyer” and referring to it as the “Attorney Robert Kory Statement”);
(d) http://blogs.theage.com.au/malcontent/archives/2005/06/leonard_cohen_s.html
(also referencing the quoted statement as
“released by Leonard Cohen’s lawyer” and referring to it as the “Attorney
Robert Kory Statement”; also later reported by MalContent to have been “emailed
by
an industry rep to MalContent”); and
Leonard Cohen sued by investment company,
alleging civil conspiracy, extortion
June 2005
Musician and
legend Leonard Cohen is being sued by a
Colorado investment company Agile Group, which
alleges Cohen and another person threatened to irreparably damage Agile's
reputation in order to extort millions of dollars from Agile and its insurer.
The case is related to claim by Cohen that Agile bears responsibility for the
alleged misappropriation of Cohen's invested funds by Cohen's former manager.
Read it here.
A statement released by Leonard Cohen's lawyer points to the truth
of this sad state of affairs:
ATTORNEY ROBERT KORY STATEMENT
IN RESPONSE TO AGILE GROUP SUIT
INVOLVING LEONARD COHEN
IN RESPONSE TO AGILE GROUP SUIT
INVOLVING LEONARD COHEN
"The suit filed by the Agile Group Monday, June 6, 2005 is
completely
consistent with Agile's reckless disregard for its client and his
investments.
consistent with Agile's reckless disregard for its client and his
investments.
We had hoped to reach an out-of-court settlement with Agile that
returned to Mr. Cohen some portion of the retirement money the firm was
authorized to administer on his behalf. Instead, in the middle of
negotiations to determine Agile's responsibilities to Mr. Cohen to
compensate him for money lost under their management, Agile launched a
surprise attack in an effort to besmirch the reputation of one of its
notable clients.
returned to Mr. Cohen some portion of the retirement money the firm was
authorized to administer on his behalf. Instead, in the middle of
negotiations to determine Agile's responsibilities to Mr. Cohen to
compensate him for money lost under their management, Agile launched a
surprise attack in an effort to besmirch the reputation of one of its
notable clients.
Agile repeatedly failed to alert Mr. Cohen to true account
balances
while allowing improper and unauthorized withdrawals by Cohen's former
business manager. In doing so Agile failed to protect Mr. Cohen's
interests and retirement savings and knowingly misled him by providing
inaccurate financial reports.
while allowing improper and unauthorized withdrawals by Cohen's former
business manager. In doing so Agile failed to protect Mr. Cohen's
interests and retirement savings and knowingly misled him by providing
inaccurate financial reports.
We will of course file a counter suit that lays out in detail how
Agile
acted in a reckless way that violated the firm's fiduciary
responsibilities towards Cohen and consequently resulted in the loss of
Mr. Cohen's retirement savings."
acted in a reckless way that violated the firm's fiduciary
responsibilities towards Cohen and consequently resulted in the loss of
Mr. Cohen's retirement savings."
·
Posted by: Adrian du Plessis at June 14, 2005 08:07 PM
(e) http://bcbr.datajoe.com/app/ecom/pub_print_article.php?id=58402
(the website for the Boulder County
Business Report, published in Colorado, which references Kory’s posting of the
statement on Cohen’s website, and re-publishes the statement).
181. In addition, Cohen made false,
disparaging, and defamatory statements and republished
false, disparaging and defamatory e-mails
to a reporter for an industry publication known as MacLeans, knowing that the
statements would be immediately published by MacLeans to the general public via
the internet and other print publications. The MacLeans article, published via
the internet on August 17, 2005. SEE ATTACHED. [Excerpt:
Cohen wrote (Greenberg) in November 2004 … “Face up to it, Neal,” the email continues,
“and square your shoulders: You were the
trusted guardian of my assets, and you let them slip away . . . Restore what
you lost, and sleep well.” In his sign-off, Cohen delivered as much a piece of advice as
his own philosophy: “Put this behind you and it will dissolve.”]
The wrongful conduct described herein was
attended by circumstances of fraud, malice, willful and wanton behavior, and
bad faith.
Consistent with their prior threats, Cohen
and Kory have knowingly published or caused to be published false information
concerning [Lynch and possibly others] in the public domain …
The false, disparaging, and defamatory
press release and other statements are not protected by any statutory or common
law privilege because the statements were not made in furtherance of any
objective of litigation, either lawful or otherwise, and because the intended
and actual recipients of the statements were not involved in or closely
connected with the litigation.
The … statements, and other defamatory
statements, were communicated to and understood by third parties to be
defamatory, and have harmed [Lynch and possibly others] reputation in the
community.
Cohen and other co-conspirators not currently named as
Defendants herein (including Robert Kory, Steve Lindsay and Betsy Superfon)
committed one or more unlawful acts in furtherance of these common goals and
objectives.
The unlawful goals and objectives of the
conspiracy included inter alia the following:
(a) The extortion and/or attempted extortion of money or property from
Plaintiffs and their insurers [and others, including Lynch] in Colorado [and
elsewhere] to recover alleged losses sustained by Cohen as the result of his
own exorbitant spending habits, his own neglect and mismanagement of his
financial, legal and personal affairs … The making of substantial threats, that
were reasonably likely to induce [Lynch and possibly others] that the threats
would be carried out, and would cause
significant economic hardship or damage to
the reputation [of Lynch and possibly others] with the intent to induce
[certain parties] to perform acts against their will; The offering of benefits
[to properly compensate Lynch with respect to her ownership interest in
numerous corporate entities; for services rendered; and so forth] to a witness
and/or members of the witness’ family with the intent to influence the witness
to testify falsely or unlawfully withhold truthful testimony; The use of
threats, acts of harassment, or acts of harm or injury to persons [including
Kelley Lynch] or property, directed to or committed upon a witness and/or
members of the witness’ family to intentionally attempt and/or actually
influence the witness to testify falsely or unlawfully withhold truthful
testimony; The intentional attempt to
induce a witness to testify falsely or unlawfully
withhold truthful testimony; The generation
and dissemination of a false, disparaging and defamatory press release and
other similar statements to third persons with the knowledge, intent, and
directive that such statements be disseminated by media publication and the
internet throughout [the world].
Cohen’s conduct described herein was
attended by circumstances of fraud, malice, and willful and wanton behavior.
Cohen and the other co-conspirators not currently named as
Defendants herein (including Robert Kory, Steve Lindsay and Betsy Superfon)
knowingly conducted or participated, directly or indirectly, in such enterprise
through a “pattern of racketeering activity” … The acts of racketeering
activity which Cohen and the unnamed co-conspirators, and the enterprise
committed, attempted to commit, conspired to commit, solicited, coerced or
intimidated others to commit included, inter alia: (a) Mail fraud; (b) Wire fraud; (c) Interference with
commerce by threats; (d) Criminal extortion; (e) Bribing a witness; (f)
Intimidating a witness; (g) Tampering
with a witness. [The witness is Kelley Lynch]
The predicate acts described herein formed
a pattern of racketeering activity, were related to the conduct of the
enterprise, and were related to each other as part of the common plan …
Cohen and his agents and attorneys have
engaged, and are continuing to engage, in a continuous and relentless pattern
of malicious and unwarranted conduct, as described more fully herein [and in
Lynch’s legal documents in various related matters and elsewhere].
Judge Babcock’s December 5, 2005 order
dismissing Robert Kory from this case [due to lack of personal jurisdiction]
contains the following statements. The
tactics and purported thuggery Judge Babcock refers to are ongoing and
ineffective: They tried to compel Ms. Lynch to participate in
their project by, among other tactics, having her arrested on false pretenses
and initiating proceedings to deprive her of her children. The Amended
Complaint does not indicate that this purported thuggery was effective.”
RE: JUDGE LEWIS
BABCOCK’S ORDER
Only the above allegations or statements in
Neal Greenberg’s Amended Complaint are factual.
UNITED STATES DISTRICT
COURT, D. COLORADO.
GREENBERG ASSOCIATES.
INC. v. COHEN
(D. Colo. Dec 05, 2005)
Decided December 5, 2005
GREENBERG ASSOCIATES. INC., d/b/a Agile
Advisors, Inc. a Delaware corporation, TACTICAL ALLOCATION SERVICES, LLC, d/b/a
Agile Allocation Services, LLC, a Delaware limited liability company, AGILE
GROUP, LLC, a Delaware limited liability company, GREENBERG ASSOCIATES
SECURITIES, INC., d/b/a Agile Group, a Delaware corporation, and NEAL R.
GREENBERG, a Colorado resident, Plaintiffs, v. LEONARD COHEN, a Canadian
citizen residing in California, ROBERT KORY, a United States citizen residing
in California, KELLEY LYNCH, a United States citizen residing in California,
and JOHN DOE, Numbers 1-25, Defendants.
Civil Case No. 05-cv-01233-LTB-MJW.
United States District Court, D. Colorado.
December 5, 2005
ORDER
LEWIS BABCOCK, Chief Judge
The defendant Robert Kory moves for dismissal
of all claims against him on the alternate grounds that I have no personal
jurisdiction over him, Fed.R.Civ.P. 12(b)(2), and that the plaintiffs have
failed to state a claim against him, Fed.R.Civ.P. 12(b)(6). The motion is adequately
briefed and oral arguments would not materially aid its resolution. For the
reasons stated below, I find and conclude that I have no personal jurisdiction
over Mr. Kory and I GRANT the motion pursuant to Rule 12(b)(2).
Because Mr. Kory has contested the Court's
jurisdiction, the plaintiffs have "the burden of proving jurisdiction
exists." Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th
Cir. 1995). *22 "Where, as in the present case, there has been
no evidentiary hearing, and the motion to dismiss for lack of jurisdiction is
decided on the basis of affidavits and other written material, the plaintiff
need only make a prima facie showing that jurisdiction exists." Id.
In resolving factual questions:
The allegations in the complaint must be taken
as true to the extent they are uncontroverted by the defendant's affidavits. If
the parties present conflicting affidavits, all factual disputes must be
resolved in the plaintiff's favor, and the plaintiff's prima facie showing is
sufficient notwithstanding the contrary presentation by the moving party.
However, only the well-pled facts of plaintiff's complaint, as distinguished
from mere conclusory allegations, must be accepted as true.
Id. (citations omitted).
I. Allegations The allegations of the Amended Complaint are substantially the
following. In 1997, the defendant Leonard Cohen, a resident of California,
retained the plaintiffs, directed by the plaintiff Neal Greenberg and
headquartered in Boulder, Colorado, to create for him charitable trusts and to manage
the assets placed into those trusts. (Throughout the Amended Complaint and
their briefs, the plaintiffs refer to themselves individually and in the
aggregate as "Greenberg." They do not reveal the nature of their
relationships to each other. I have attempted to be as precise as the pleadings
and the record will allow.) Mr. Cohen allegedly drew extravagant sums from the
trusts, depleting the principal amounts and impeding the plaintiffs' efforts
successfully to invest the funds in profitable ventures. The defendant Kelley
Lynch, Mr. Cohen's manager, oversaw and had power of attorney over, all of Mr.
Cohen's financial dealings. Mr. Greenberg allegedly repeatedly warned Ms. Lynch
and Mr. Cohen that Mr. Cohen was spending too much and that, absent a change of
habit, he would become destitute. *33 In October, 2004, Mr. Cohen and
Ms. Lynch allegedly parted ways and began to issue competing directives to the
plaintiffs. They each blamed the other for Mr. Cohen's financial distress. Mr.
Cohen claimed that Ms. Lynch had deprived him of substantial sums of money.
Thereafter, Mr. Cohen and Mr. Kory, Mr. Cohen's personal attorney and a
California resident, allegedly conspired to extort the lost sums from the
plaintiffs by tarnishing the plaintiffs' reputation, asserting spurious claims,
and coercing a settlement from the plaintiffs' insurance carrier. This they
intended to accomplish by using Mr. Cohen's fame as a prominent recording
artist to publish defamatory statements about the plaintiffs to the press. They
tried to compel Ms. Lynch to participate in their project by, among other
tactics, having her arrested on false pretenses and initiating proceedings to
deprive her of her children. The Amended Complaint does not indicate that this
purported thuggery was effective.
Mr. Kory sent an allegedly defamatory demand letter to Mr.
Greenberg's attorney, wrongly accusing the plaintiffs of fraud and various
breaches of fiduciary duty. After the plaintiffs filed this lawsuit, Messrs.
Cohen and Kory allegedly published defamatory statements on Mr. Cohen's web
site, blaming the plaintiffs for the lost monies, asserting that the plaintiffs
had wrongfully permitted Ms. Lynch to withdraw unauthorized sums, and asserting
that the plaintiffs had provided Mr. Cohen with fraudulent accounting records.
Mr. Cohen and Ms. Lynch now dispute entitlement to the funds remaining in the
trusts. Each seeks immediate acquisition of the funds.
Mr. Kory allegedly submitted to the
jurisdiction of this Court by his purposeful and repeated written and
telephonic communications with the plaintiffs and his direction of Mr.
Greenberg's activities, performed in Colorado. Additionally, Mr. Kory allegedly
reserved a *44 conference room at the Denver International Airport
and scheduled a meeting, which he, Mr. Greenberg, Mr. Cohen, and Mr.
Greenberg's counsel were to attend. Messrs. Kory and Cohen allegedly failed to
appear for the meeting, which Mr. Greenberg attended.
II. The record
A. Kory affidavit
Mr. Kory has provided two affidavits replete with refutations of the
plaintiffs' jurisdictional allegations. He is licensed to practice law in
California, where he resides and has his law practice. He last traveled to
Colorado in 1985 or 1986 for a ski vacation. He has no business or property
interests in Colorado.
In the fall of 2004, Mr. Cohen retained Mr.
Kory to investigate suspected losses from an entity denominated Traditional
Holdings, LLC ("Traditional"), which the plaintiff, Tactical
Allocation Services, LLC ("Tactical") managed for Mr. Cohen under Mr.
Greenberg's direction. In the ensuing weeks, Mr. Kory contacted Tactical's
Boulder, Colorado office on two or three occasions. Tactical responded by
sending information about Mr. Cohen's accounts to Mr. Kory in California.
Thereafter, Mr. Kory communicated predominantly with Tactical's legal counsel,
Sherab Posel, whom Mr. Kory believed to be resident in New York. Though he
engaged in at least one email exchange with representatives of Tactical located
in Boulder, Mr. Kory communicated Mr. Cohen's asserted legal claims against
Tactical and related requests for information to Mr. Posel, who responded on
letterhead imprinted with New York addresses.
In April, 2005, Mr. Kory and Mr. Posel scheduled a mediation for
June 5, 2005, which was to occur in Colorado. Mr. Kory reserved a conference
room at a hotel near the Denver airport in anticipation of that meeting. After
Mr. Posel disputed the veracity of Mr. Cohen's *55 claims and
threatened litigation, Mr. Kory cancelled the room reservation in Colorado and
remained in California.
B. Barnett affidavit
Timothy Barnett, Tactical's Vice President who
works in Boulder, has produced correspondence — emails and letters — between
Mr. Kory and representatives of the plaintiffs in Colorado and New York.
Numerous emails and letters between Mr. Kory and Mr. Barnett throughout the
period beginning in November, 2004 and ending in June, 2005 addressed Mr.
Kory's requests for information about the accounts that Tactical managed for
Mr. Cohen and Tactical's efforts to comply with those requests. Contrary to Mr.
Kory's assertion, these communications number in the dozens. Many of the
communications indicate that copies were sent to Mr. Greenberg and Mr. Posel,
among others. Emails exchanged on December 15 and 16, 2004 detailed plans for a
conference call involving Messrs. Kory, Barnett, and Posel. The three set up
another conference call in March, 2005. Other emails reference telephone calls
between Mr. Kory and Mr. Barnett and calls and conversations between Mr. Kory
and Mr. Posel.
In an April 10, 2005, twenty-seven page demand letter to Mr. Posel,
Mr. Kory asserted claims against "the Agile Group, Neal Greenberg and his
partners" on Mr. Cohen's behalf. Mr. Kory made repeated references to the
"several telephone conversations and e-mails regarding" the claims
that he and Mr. Posel had previously exchanged. He invited a further response
from Mr. Posel. Thereafter, Mr. Kory and Mr. Barnett exchanged emails only
discussing the scheduling of a mediation meeting for June 5, 2005. Mr. Posel
and Mr. Kory continued to communicate in writing about Mr. Cohen's allegations.
On June 4, 2005, Mr. Kory wrote to Mr. Posel by email cancelling the mediation,
but making no reference to the lawsuit that the plaintiffs had
purportedly *66threatened. In a June 9, 2005 email, Mr. Kory expressed
surprise at the contents of a draft complaint that Mr. Posel had sent him the
day before.
By letter on June 2, 2005, Mr. Kory sent to Mr.
Barnett two checks for deposit in Mr. Cohen's accounts. On June 7, Mr. Barnett
responded in writing, noting that Mr. Cohen had terminated his relationship
with the plaintiffs.
III. Discussion
"To obtain personal jurisdiction over a
nonresident defendant in a diversity action, a plaintiff must show that
jurisdiction is legitimate under the laws of the forum state and that the
exercise of jurisdiction does not offend the due process clause of the
Fourteenth Amendment." Far West Capital, Inc. v. Towne,46 F.3d 1071,
1074 (10th Cir. 1995). Because, as set forth below, I conclude that the
Colorado long-arm statute does not reach Mr. Kory, I need not consider the
constitutional question. The plaintiffs argue that Mr. Kory has submitted to
jurisdiction in Colorado by the "commission of a tortious act within this
state." Colo. Rev. Stat. § 13-1-124(1)(b). Colorado courts have held that
the tort provision of the long-arm statute may be satisfied either 1) when
tortious conduct occurs in Colorado, or 2) when tortious conduct initiated in
another state causes injury in Colorado. Wenz, 55 F.3d at
1507; Classic Auto Sales, Inc. v. Schocket, 832 P.2d 233,
235-236 (Colo. 1992).
The plaintiffs first argue that Mr. Kory committed tortious conduct
in Colorado. Directing into Colorado communications by which a tort is
committed constitutes conduct sufficient to satisfy the statute if the tort is
completed by the plaintiff's receipt in Colorado of the communications. Id. at
236; Broadview Financial, Inc. v. Entech Management Services Corp., *77859
F. Supp. 444, 448 (D. Colo. 1994). However, merely communicating with a
person resident in Colorado is, in itself, insufficient to bring a defendant
within the reach of the Colorado statute. Archangel Diamond Corp. v. Lukoil,
___ P.3d ___, 2005 WL 3097588 (Colo. 2005).
Mr. Kory's several communications with Mr.
Barnett concerned Mr. Kory's attempts to elicit information from Mr. Barnett
that would prove useful to Mr. Cohen. Though the plaintiffs feel that Mr. Kory
solicited their cooperation in bad faith — Mr. Kory used much of the
information the plaintiffs provided to construct claims against them, even as
he repeatedly commended them for their diligence — the gravamen of their claims
against Mr. Kory is that he conspired to defame them and to extort money from
them by asserting frivolous claims. Mr. Kory directed to Mr. Posel in New York,
and not to Mr. Barnett in Colorado, the communications by which he allegedly
accomplished those torts. The plaintiffs have not argued — nor does it appear
from the record — that the exchange of information and documents between Mr.
Kory and Mr. Barnett was tortious. Nor could the plaintiffs premise liability
on Mr. Kory's later-reneged reservation of a conference room in Colorado. I am
left to determine whether the plaintiffs have suffered an injury in Colorado as
a result of Mr. Kory's allegedly tortious acts. Wenz,55 F.3d at
1507. Tortious-activity jurisdiction obtains under the statute when "the
injury itself" occurs in Colorado. McAvoy v. District Court, 757
P.2d 633, 635 (Colo. 1988).
Further, the injury in the forum state must be
direct, not consequential or remote, and loss of profits in the state of
plaintiff's domicile is insufficient to sustain long-arm jurisdiction over a
nonresident defendant. Hence, when both the tortious conduct and the injury
occur in another state, the fact that plaintiff resides in Colorado and
experiences some economic consequences here is insufficient to confer
jurisdiction on a Colorado court. Amax
Potash Corp. v. Trans-Resources, Inc., 817 P.2d 598, 600 (Colo.Ct.App. 1991)
(citations *88 omitted).
The plaintiffs argue that Mr. Kory directed the
injurious consequences of his wrongful activity toward Colorado because they,
who have an office here, were the intended recipients of the harm. They cite D
D Fuller CATV Const., Inc. v. Pace,780 P.2d 520(Colo. 1989) for the proposition
that Mr. Kory could, therefore, have reasonably anticipated being haled into court
in Colorado. However, they have not addressed the prior question where the
injury occurred. Nothing in the record, Mr. Barnett's correspondence from
Colorado included, appears to demonstrate that the plaintiffs suffered an
injury in Colorado. Indeed, the only business the plaintiffs are alleged to
have lost was transacted with Mr. Cohen, who resides in California.
Accordingly, it is ORDERED that
1) Robert Kory's motion to dismiss pursuant to Fed.R.Civ.P.12(b)(2)
[13] is GRANTED; and
2) the plaintiffs' claims against Mr. Kory are
dismissed.
