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#6901 Post by John Morris » January 18th, 2018, 3:14 pm

Victor Hong wrote:I believe that salaries are deemed super-senior obligations unlikely for clawback because, if operationally key employees leave during bankruptcy, a distressed business would generate much lower recoveries and face much greater liquidation risk.
? I think you've mangled things.

Pre-petition wages have no priority, so far as I know. They're just unsecured claims so employees usually see little for back wages.

All claims after the filing have priority, and in this case the employment was approved by the court in advance.
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#6902 Post by Al Osterheld » January 18th, 2018, 3:20 pm

I think the discussion was about clawback of salary that had already been paid.

-Al

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#6903 Post by John Morris » January 18th, 2018, 3:26 pm

Right. Victor's terminology and the references to the IT guy confused me. It's not that pre-petition wages are senior. It's that ordinary wages (as opposed to payments to owners) are not covered by the preference section, as I recall (dimly).
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#6904 Post by Victor Hong » January 18th, 2018, 3:58 pm

John Morris wrote:Right. Victor's terminology and the references to the IT guy confused me. It's not that pre-petition wages are senior. It's that ordinary wages (as opposed to payments to owners) are not covered by the preference section, as I recall (dimly).
That is the ultimate in super-seniority.
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#6905 Post by Dale Bowers » January 18th, 2018, 4:08 pm

Neal.Mollen wrote:
Al Osterheld wrote:I've made no claim about what he did, didn't, or should have known. Victor made a remark implied he was hired because he knew about the fraud, I've seen nothing in the docket that would support that claim. As far as what people to have been his level of culpability, that's up to them and doesn't particularly matter to me.

As far as whether the Feds should have pursued the smaller fish, I think they would have had trouble without Fox implicating them and he pretty much did the opposite.

-Al
In the criminal context, what they did is absolutely typical and, I think, appropriate. Flip and get cooperation from the small fries; bring the hammer down in the big fish. Routine.
I’m not a lawyer and don’t play one on TV, but isn’t knowledge of a crime and failing to report a crime too? How many millions would have been saved had an employee gone to the feds 1 year earlier with their suspicions? 2 years ? 5 years?
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#6906 Post by Dale Bowers » January 18th, 2018, 4:09 pm

Neal.Mollen wrote:
Al Osterheld wrote:I've made no claim about what he did, didn't, or should have known. Victor made a remark implied he was hired because he knew about the fraud, I've seen nothing in the docket that would support that claim. As far as what people to have been his level of culpability, that's up to them and doesn't particularly matter to me.

As far as whether the Feds should have pursued the smaller fish, I think they would have had trouble without Fox implicating them and he pretty much did the opposite.

-Al
In the criminal context, what they did is absolutely typical and, I think, appropriate. Flip and get cooperation from the small fries; bring the hammer down in the big fish. Routine.
I’m not a lawyer and don’t play one on TV, but isn’t knowledge of a crime and failing to report a crime too? How many millions would have been saved had an employee gone to the feds 1 year earlier with their suspicions? 2 years ? 5 years?
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#6907 Post by Neal.Mollen » January 18th, 2018, 4:17 pm

Generally no.

Generally no.
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#6908 Post by Dale Bowers » January 18th, 2018, 4:20 pm

Thank you.

Thank you.
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#6909 Post by John Morris » January 18th, 2018, 4:25 pm

Victor Hong wrote:
John Morris wrote:Right. Victor's terminology and the references to the IT guy confused me. It's not that pre-petition wages are senior. It's that ordinary wages (as opposed to payments to owners) are not covered by the preference section, as I recall (dimly).
That is the ultimate in super-seniority.
No. Seniority has to do with creditors' claims against the debtor's assets, while the preference (clawback) provision is a right of the debtor against outsiders, who might or might not be creditors.
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#6910 Post by Marcus Dean » January 18th, 2018, 4:32 pm

[quote="Dale Bowers

I’m not a lawyer and don’t play one on TV, [/quote]




I am stealing this line Dale, thanks you cheered me up [rofl.gif]

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#6911 Post by Al Osterheld » January 18th, 2018, 9:48 pm

In the criminal context, what they did is absolutely typical and, I think, appropriate. Flip and get cooperation from the small fries; bring the hammer down in the big fish. Routine.
Sure, it would be typical. But, I haven't seen anything about the criminal case (which was distinct from the trustee's request to employ Nishi) that suggests they flipped any of the employees or needed or utilized their knowledge of anything criminal to bring the hammer down. The truth is that this Fox was not very good at covering his tracks.

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#6912 Post by Al Osterheld » January 18th, 2018, 10:27 pm

FWIW, earlier this week the trustee filed a statement supporting the December request for payment to Nishi, as well as an estimate of the trustee's expectations for his continued need for those services (estimated at an additional 1000 hours). When the December request was filed, the judge authorized partial payment with a quarter withheld pending consideration of this additional information from the trustee.

-Al

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#6913 Post by Dale Bowers » January 19th, 2018, 7:30 am

Al Osterheld wrote:FWIW, earlier this week the trustee filed a statement supporting the December request for payment to Nishi, as well as an estimate of the trustee's expectations for his continued need for those services (estimated at an additional 1000 hours). When the December request was filed, the judge authorized partial payment with a quarter withheld pending consideration of this additional information from the trustee.

-Al
So Nishi helped screw the customers and now is getting paid to help the trustee screw them again. Nice. [swearing.gif]
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#6914 Post by Al Osterheld » January 19th, 2018, 9:47 am

Yes, the data from PC files to support clawback actions based on transfers of money or wine almost entirely come from Nishi. I think the trustee has also used records from banks and credit card companies, although I believe those mostly involve payments to leasing companies, people who held notes on the Berkeley property or who had loaned Fox money, and payments to credit card companies (mostly for personal expenses of Fox and family). Besides the databases used for inventory and customer orders, he has also recovered information from email servers and an image of the hard drive in Fox's computer.

This recent statement was filed in response to the judge's request for additional information supporting the fees being run up by the trustee, his counsel and accountants, and Nishi (25% of the December request for interim payment was withheld pending the additional info). Of note in the response is that the trustee expects the case to close some time in 2019.

-Al

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#6915 Post by Victor Hong » January 19th, 2018, 10:09 am

Dale Bowers wrote:
Al Osterheld wrote:FWIW, earlier this week the trustee filed a statement supporting the December request for payment to Nishi, as well as an estimate of the trustee's expectations for his continued need for those services (estimated at an additional 1000 hours). When the December request was filed, the judge authorized partial payment with a quarter withheld pending consideration of this additional information from the trustee.

-Al
So Nishi helped screw the customers and now is getting paid to help the trustee screw them again. Nice. [swearing.gif]
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#6916 Post by Dale Bowers » January 23rd, 2018, 1:40 pm

The gift that keeps on giving........

https://www.wine-searcher.com/m/2018/01 ... tung-again
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#6917 Post by SteveC » January 23rd, 2018, 2:53 pm

Between Premier Cru, Maison Ilan, certain shady sales people and two ex wives fighting for wines that they cared little to nothing about and had no interest in claiming, wine has left a very bad taste in my mouth. Were it not for a few friends that I have made here, I am regretful that I ever caught the wine collecting and tasting bug.
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#6918 Post by amjohnstone » January 23rd, 2018, 6:36 pm

SteveC wrote:Between Premier Cru, Maison Ilan, certain shady sales people and two ex wives fighting for wines that they cared little to nothing about and had no interest in claiming, wine has left a very bad taste in my mouth. Were it not for a few friends that I have made here, I am regretful that I ever caught the wine collecting and tasting bug.
Very sorry to hear that. I was burned by PC as well, if not as badly as others. If you can make it to Chicago sometime, please let me know and we can open some very excellent champagne.
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#6919 Post by SteveC » January 24th, 2018, 1:46 pm

Imagine buying goods from Amazon and it turns out that they declared bankruptcy and that there was a fraud behind it. Now imagine that you are sued for everything that you ever bought. That is what is happening in this case, just because I received some, but not all, of what I paid for within 90 days of the filing, of which I had no idea would happen, nor did I have any clue back in December 2011 through June 2012 when I purchased the wines. This was not an investment transaction, nor one that would generate a return. It was a pure and simply a purchase of goods. Some of these goods were eventually delivered (after years of haranguing them and some weren’t ever delivered. The lawyers and the bankruptcy trustee are trying to hold us responsible for the entirety of what we purchased, whether received or not. This is insanity.
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#6920 Post by Ken V » January 24th, 2018, 1:50 pm

SteveC wrote:Imagine buying goods from Amazon and it turns out that they declared bankruptcy and that there was a fraud behind it. Now imagine that you are sued for everything that you ever bought. That is what is happening in this case, just because I received some, but not all, of what I paid for within 90 days of the filing, of which I had no idea would happen, nor did I have any clue back in December 2011 through June 2012 when I purchased the wines. This was not an investment transaction, nor one that would generate a return. It was a pure and simply a purchase of goods. Some of these goods were eventually delivered (after years of haranguing them and some weren’t ever delivered. The lawyers and the bankruptcy trustee are trying to hold us responsible for the entirety of what we purchased, whether received or not. This is insanity.
I have a friend who asked for his wines to be shipped on a particular day, but the weather turned hot where he lived, so they delayed it one week. That week put him within the 90 days and cost him a lot of money. I agree, it is crazy.
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#6921 Post by John Morris » January 24th, 2018, 2:21 pm

Ken V wrote:
SteveC wrote:Imagine buying goods from Amazon and it turns out that they declared bankruptcy and that there was a fraud behind it. Now imagine that you are sued for everything that you ever bought. That is what is happening in this case, just because I received some, but not all, of what I paid for within 90 days of the filing, of which I had no idea would happen, nor did I have any clue back in December 2011 through June 2012 when I purchased the wines. This was not an investment transaction, nor one that would generate a return. It was a pure and simply a purchase of goods. Some of these goods were eventually delivered (after years of haranguing them and some weren’t ever delivered. The lawyers and the bankruptcy trustee are trying to hold us responsible for the entirety of what we purchased, whether received or not. This is insanity.
I have a friend who asked for his wines to be shipped on a particular day, but the weather turned hot where he lived, so they delayed it one week. That week put him within the 90 days and cost him a lot of money. I agree, it is crazy.
Steve -- It's not so crazy if you look at it from the perspective of the court and the trustee trying to ensure that assets are distributed fairly among all the victims. Some people got wine and refunds shortly before the bankruptcy filing, leaving less there for those who didn't get theirs before the filing. The business was insolvent then, so that was basically putting those people ahead of others in the queue to be paid. What you're essentially saying is that you should be able to keep what you got because you were lucky enough to get it before the company went down, and others who didn't should just be out of luck.

Ken, if you're friend's wine had been shipped 91 days before the filing, he'd be laughing about what a lucky bastard he was

Deadlines and thresholds like the 90-day preference period are inherently arbitrary. But you can't draft rules without them. And what got refunded or shipped when by PC was arbitrary, too, or, worse yet, just a matter of who screamed loudest or made the most threats.

There's no outcome that will make everyone happy when so many people lost so much.
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#6922 Post by Dale Bowers » January 24th, 2018, 2:35 pm

John Morris wrote:
Ken V wrote:
SteveC wrote:Imagine buying goods from Amazon and it turns out that they declared bankruptcy and that there was a fraud behind it. Now imagine that you are sued for everything that you ever bought. That is what is happening in this case, just because I received some, but not all, of what I paid for within 90 days of the filing, of which I had no idea would happen, nor did I have any clue back in December 2011 through June 2012 when I purchased the wines. This was not an investment transaction, nor one that would generate a return. It was a pure and simply a purchase of goods. Some of these goods were eventually delivered (after years of haranguing them and some weren’t ever delivered. The lawyers and the bankruptcy trustee are trying to hold us responsible for the entirety of what we purchased, whether received or not. This is insanity.
I have a friend who asked for his wines to be shipped on a particular day, but the weather turned hot where he lived, so they delayed it one week. That week put him within the 90 days and cost him a lot of money. I agree, it is crazy.
Steve -- It's not so crazy if you look at it from the perspective of the court and the trustee trying to ensure that assets are distributed fairly among all the victims. Some people got wine and refunds shortly before the bankruptcy filing, leaving less there for those who didn't get theirs before the filing. The business was insolvent then, so that was basically putting those people ahead of others in the queue to be paid. What you're essentially saying is that you should be able to keep what you got because you were lucky enough to get it before the company went down, and others who didn't should just be out of luck.

Ken, if you're friend's wine had been shipped 91 days before the filing, he'd be laughing about what a lucky bastard he was

Deadlines and thresholds like the 90-day preference period are inherently arbitrary. But you can't draft rules without them. And what got refunded or shipped when by PC was arbitrary, too, or, worse yet, just a matter of who screamed loudest or made the most threats.

There's no outcome that will make everyone happy when so many people lost so much.
While I agree you are correct, what Steve and I are upset over is a big chunk of this clawback money is going into the trustee's pocket along with his merry gang of lawyers. The more he sues the more he makes. I didn't receive any wine/money pre 90 days, yet I am still out $7,500+ and have yet to see a single dime. So where's all this money going? Does the trustee have to submit who has gotten any monies and how much?
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#6923 Post by John Morris » January 24th, 2018, 3:05 pm

From the filing, it appeared there were very few assets relative to the claims and there were some secured creditors, which is bad news for customers, who are unsecured.

Whether the trustee's strategy and billings are appropriate depends on what he's netted for the estate. How do his fees compare to additional assets obtained for the estate since the filing? That's the question. If he can actually get money back from credit card companies, suppliers and hookers, God bless him!

The trustee for Madoff took a lot of heat for his aggressive clawbacks and for his fees, but in the end he rounded up billions more for victims. Of course, that was a very different case, where the sums could justify more legal fees.
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#6924 Post by Ken V » January 24th, 2018, 3:51 pm

John Morris wrote:If he can actually get money back from credit card companies, suppliers and hookers, God bless him!...
Can I ask for payment in "services"? [wink.gif]
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#6925 Post by Al Osterheld » January 24th, 2018, 6:09 pm

The trustee is also filing fraudulent transfer claims for at least some transfers outside the 90 days but in the six years preceding the filing. He claims to have collected $3M on his various avoidance claims and expects to collect at least $5M additional. For the money he has collected to date, I think it is mostly not from customers except those that voluntarily complied (at some level) with his original demand letter, because most of the filings of adversary actions against customers have been fairly recent.

It appears that the "net winner" claims come from the difference between the price Fox ultimately paid to source wine that was sent to customers compared to the price originally paid by the customer. If PC paid more, they are declared a "net winner" for that wine.

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#6926 Post by Mont Stern » January 24th, 2018, 6:54 pm

I sent the article about this to a friend who is a bankruptcy attorney and his reply to me was:

As Mason said to Dixon, you have to draw the line SOMEWHERE! [winner.gif]

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#6927 Post by Don Cornwell » January 25th, 2018, 12:24 am

Al Osterheld wrote:The trustee is also filing fraudulent transfer claims for at least some transfers outside the 90 days but in the six years preceding the filing.

-Al
Al:

Unfortunately, your understanding is way off on the numbers. The real world situation is far worse than you describe. The Trustee has sued many people on wines purchased as long ago as 2002 and 2003 -- that's 15 to 16 years ago, not six. Of the claims currently being litigated I know of one case where some of the wines were purchased in June of 2002 -- that's reaching back 16 years. Those purchases occurred 7 years prior to the operative maximum statute of limitations "reach back" date of January 8, 2009. In another case that was filed, the wine was purchased in July of 2003.

The Trustee's purported justification for suing people for all of these relatively ancient transactions is the claim that that everything is measured under the Uniform Fraudulent Transfer Act ("UFTA") based on the date the wines were delivered rather than the date that the money the purchaser paid was exchanged for Premier Cru's written contractual promise to deliver the wine upon arrival (or under the Uniform Commercial Code, within a reasonable time.) That is absolutely incorrect as a matter of law, and frankly, it isn't even a close question.

Using the delivery date for the wine instead of its purchase date also creates very large discrepancies in value in some cases. The rarer the wine sold, and/or the rarer the bottle size, and the longer the delay in delivery, the more likely it is that a delay in delivery produced a substantial discrepancy in value according to the Trustee. Someone I know purchased three 3 liter bottles of 2003 Chateau Latour. After many battles with Premier Cru, he actually received those 3 liter bottles from Premier Cru some five plus years later in 2009. He is being sued for thousands of dollars by the Trustee for those very bottles. The Trustee is claiming the difference in the value of the wine at the time it was delivered versus the amount that was initially paid for the wine. But to add insult to injury, the Trustee's complaint pretends that the customer didn't pay for the wine at all. The Trustee is suing him for the alleged fair market value of the wines in 2009 -- with no deduction of the purchase price that he paid. In effect, the Trustee is treating the wine as though it was stolen and suing for the alleged fair market value of the three 3 liter bottles when they were delivered in 2009 -- plus interest on that sum since 2009.

What is truly ironic here is that the claims that the Trustee is asserting turn the provisions of the Uniform Commercial Code governing the sale of goods for future delivery, and the provisions of the Uniform Fraudulent Transfer Act, which governs fraudulent conveyances, completely upside down.

The UCC, which governs the sale of goods, provides that where a customer enters into a contract with a wine merchant for the pre-arrival purchase of wine, an enforceable contract is formed at the time when the buyer exchanges cash in return for the merchant's legally enforceable promise to deliver the specified wine purchased within a reasonable period of time. Under the Uniform Commercial Code, if the merchant fails to deliver the wine within a commercially reasonable period of time (which is measured objectively based upon all of the relevant facts and circumstances), the buyer is entitled to sue the merchant for non-delivery and to recover as damages the difference between the purchase price paid and the fair market value of the wine at the time that the customer learned (of should have known) that the wine was not being delivered.

Despite the Trustee's claim to the contrary, the same rules apply to fraudulent transfers under the Uniform Fraudulent Transfer Act, which is the California statute that the Trustee is principally relying upon in the 70-some fraudulent conveyance claims filed. Under the Uniform Fraudulent Transfer Act, California Civil Code Section 3439.06(e), the very same rule about the the time of contracting applies. The debtor (Premier Cru) is deemed to have "incurred the obligation" to deliver the wine at the the time that the contract was entered into between the parties, i.e. at the time of the exchange of the cash in return for the issuance of confirmed purchase order by Premier Cru. Under the UFTA, a "transfer made or obligation incurred" is avoidable as a fraudulent transfer "if the debtor made the transfer or incurred the obligation" either with actual intent to hinder, delay or defraud creditors, or "without receiving reasonably equivalent value in exchange for the transfer or obligation" and the debtor was either insolvent or about become insolvent at the time.

Fraudulent transfer claims are usually broken into two categories -- so called "actual fraud" cases where the Trustee proves that the debtor entered into the transaction with the actual intent to hinder, delay or defraud creditors, and "reasonably equivalent value" cases, where a party received an asset transfer or contracted to receive something which the debtor was obligated to provide, but the defendant did not pay the "reasonably equivalent value" (generally described as "fair market value") for the transfer made or the contractual obligation to be performed. But in both types of cases, the creditor/customer has no liability for an alleged fraudulent transfer if the creditor/consumer paid "reasonably equivalent value" for the asset transferred or the obligation incurred by the debtor at the time of the exchange. The only practical difference is who has the burden of proof to establish "reasonably equivalent value" at the time of the exchange or the lack thereof. Moreover, even in Ponzi scheme cases (and this isn't one under Ninth Circuit precedent because this does not involve an "investment scheme"), where the purchaser paid or transferred "reasonably equivalent value" for what the purchaser received, there is no liability for a fraudulent transfer.

The key words in the UFTA statute (Civil Code Section 3439.04I(a) in the context of pre-arrival wine purchases are "without receiving reasonably equivalent value in exchange for ... the obligation" The case law on fraudulent conveyances, both under Federal (Bankruptcy) law and state law, is that the date of measurement of "reasonably equivalent value" is the date of the exchange of consideration between the parties, which in these types of cases means the time that debtor incurred the contractual obligation to deliver the wine in the future in exchange for the cash paid. The case law is equally clear that subsequent increases or decreases in the value of the property that the debtor agreed to sell must be disregarded in determining "reasonably equivalent value." Once again, this rule is simply one of common sense. If the buyer paid the fair market value of the wine at the time the contract to sell pre-arrival wine was entered into, then the seller (here Premier Cru) received 100% of what it was legally entitled to receive in an arm's length, non-fraudulent transaction -- so the purchaser cannot be found liable for a fraudulent transfer -- even where there is an alleged Ponzi scheme operating. The law in the Ninth Circuit is very clear on that point.

There are other totally contradictory positions taken in the Trustee's various fraudulent transfer complaints, but I've droned on long enough.

So why is the Trustee suing scores of former customers of Premier Cru claiming that they owe money to the Bankruptcy Estate for the difference between the amount paid and the value of the wine at the time they were delivered? And why is the Trustee suing each customer for the alleged value of all wines received without deducting, or even mentioning in the complaints filed with the Bankruptcy Court, the amount paid for by the customer to purchase the wine in the first instance? There is simply no rational explanation for this assuming that the Trustee and his counsel are acting properly. There are an awful lot of serious unanswered questions here.
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#6928 Post by Al Osterheld » January 25th, 2018, 7:00 am

Thanks for the detailed analysis, Don. Actually, I did recognize that some of the attempted clawbacks involved purchases earlier than January 9, 2009. That's why I wrote "some transfers" rather than "some purchases". I should have written seven years rather than six, but misremembered the year of the filing (it seems like it's been dragging on forever).

As far as the logic the trustee and his counsel have been using, while I don't know the law and thankfully have had no prior experience with bankruptcy cases, I've been surprised by many of his filings and thought some of them were questionable and was skeptical of their legal basis. At this point, most of these filings have not been litigated (not sure any of them have been). They are clearly hoping most will end with settlements. Unfortunately, for many of the customers, the amounts are significant but likely not significant enough to justify hiring counsel. A few of the claims are large enough they may end in litigation (a number of these aren't against customers).

To be clear, I'm not trying to explain the law, just providing information about what the trustee is doing. For example, the post from which you quoted was motivated by some earlier posts that appeared to assume filings against customers only involved the 90 day preference period.

-Al

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#6929 Post by Steven Miller » January 25th, 2018, 7:29 am

Seems like those getting dragged in need to get together and fight back. On the surface, it appears the Trustee is winning enough he's motivated to keep pushing. Jamie chose to just write a check, how many others are choosing the same vs. fighting back?

What's the worst that can happen to him for pushing too hard?
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#6930 Post by Dale Bowers » January 25th, 2018, 7:40 am

Is it public record what monies have been recovered and its subsequent distribution?
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#6931 Post by Ken V » January 25th, 2018, 7:59 am

Don,

Taking what you are saying at face value (and why wouldn't I?), how can that be resolved? That is, if the trustee is misapplying the law, where in the system would this be corrected? Will it be resolved when it is challenged by a customer to the judge in the case or will it have to go higher?

Following up on what Steven said, does it make sense for those who lost modest amounts to team up with those who lost a lot and fight this together?

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#6932 Post by Victor Hong » January 25th, 2018, 8:00 am

Could the trustee itself be charged with fraud?
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#6933 Post by Dave Nerland » January 25th, 2018, 8:41 am

It's all about billable hours.....The greatest beneficiary in this BK case will be the attorneys. Real simple.

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#6934 Post by andy velebil » January 25th, 2018, 8:45 am

If he's violating established case law/laws perhaps someone needs to report the attorney to the State Bar for misconduct. Or does anyone have a contact with the main-stream news media.

http://www.calbar.ca.gov/Public/Complai ... -Complaint
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#6935 Post by Peter Chiu » January 25th, 2018, 8:49 am

*****.....The Trustee has sued many people on wines purchased as long ago as 2002 and 2003 -- that's 15 to 16 years ago, not six. Of the claims currently being litigated I know of one case where some of the wines were purchased in June of 2002 -- that's reaching back 16 years...... *****

Hmmm.....so if I understand correctly : 2005 red burgundy purchases are also involved too [oops.gif]

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#6936 Post by Wes Barton » January 25th, 2018, 2:36 pm

andy velebil wrote:If he's violating established case law/laws perhaps someone needs to report the attorney to the State Bar for misconduct. Or does anyone have a contact with the main-stream news media.

http://www.calbar.ca.gov/Public/Complai ... -Complaint
It sure does sound like misconduct, abusing his position as trustee.

As a reminder, one of the first things he tried was to sneak all the inventory off to be sold. This thread tipped someone off to quickly challenge that, leading to the ruling regarding segregated wines and so forth. It seems like he has no interest in upholding the fiduciary role that he was entrusted with.
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#6937 Post by Dale Bowers » January 25th, 2018, 3:37 pm

Wes Barton wrote:
andy velebil wrote:If he's violating established case law/laws perhaps someone needs to report the attorney to the State Bar for misconduct. Or does anyone have a contact with the main-stream news media.

http://www.calbar.ca.gov/Public/Complai ... -Complaint
It sure does sound like misconduct, abusing his position as trustee.

As a reminder, one of the first things he tried was to sneak all the inventory off to be sold. This thread tipped someone off to quickly challenge that, leading to the ruling regarding segregated wines and so forth. It seems like he has no interest in upholding the fiduciary role that he was entrusted with.

A lawyer acting badly? I'm shocked, shocked I tell you. neener
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#6938 Post by John Morris » January 25th, 2018, 3:40 pm

andy velebil wrote:If he's violating established case law/laws perhaps someone needs to report the attorney to the State Bar for misconduct.
Everyone thinks his adversary is violating established case law. That complaint will bring a big yawn at the State Bar and go straight into its revolving file.

Moreover, bankuptcy trustees are officers of the federal court and act under court supervision, which means they have all sorts of legal immunities. I assume his strategy for collecting assets was approved by the court at some stage.

Bottom line: If you have a beef, you need to take it to the bankruptcy court.

(I represented the receiver in a federal case for many years. We had to assert his immunity as an agent of the court many, many times.)
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#6939 Post by Neal.Mollen » January 25th, 2018, 4:06 pm

John Morris wrote:
andy velebil wrote:If he's violating established case law/laws perhaps someone needs to report the attorney to the State Bar for misconduct.
Everyone thinks his adversary is violating established case law. That complaint will bring a big yawn at the State Bar and go straight into its revolving file.

Moreover, bankuptcy trustees are officers of the federal court and act under court supervision, which means they have all sorts of legal immunities. I assume his strategy for collecting assets was approved by the court at some stage.

Bottom line: If you have a beef, you need to take it to the bankruptcy court.

(I represented the receiver in a federal case for many years. We had to assert his immunity as an agent of the court many, many times.)
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#6940 Post by Dale Bowers » January 25th, 2018, 4:33 pm

Neal, do you think going back 15+ years is correct?
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#6941 Post by Neal.Mollen » January 25th, 2018, 4:40 pm

Dale Bowers wrote:Neal, do you think going back 15+ years is correct?
I think if the law allows it, the trustee, who has a fiduciary duty to maximize the value of the estate, has an absolute obligation to at least determine whether doing so will achieve that goal. It is his job.

As for whether it is fair to go back 15+ years, that is a question you should address to your member of Congress. The Trustee has no more power to decide that question than you or I do.
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#6942 Post by Dale Bowers » January 25th, 2018, 4:50 pm

Thanks for your insight. I wasn’t trying to be snarky. I was just asking if as a lawyer you think the trustee is acting within stated law as Don thinks he has overstepped and is reaching.
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#6943 Post by andy velebil » January 25th, 2018, 5:03 pm

Dale Bowers wrote:Thanks for your insight. I wasn’t trying to be snarky. I was just asking if as a lawyer you think the trustee is acting within stated law as Don thinks he has overstepped and is reaching.
If you ask Neal this but change lawyer to cop he'll tell you the exact opposite. :P
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#6944 Post by Neal.Mollen » January 25th, 2018, 5:05 pm

Dale Bowers wrote:Thanks for your insight. I wasn’t trying to be snarky. I was just asking if as a lawyer you think the trustee is acting within stated law as Don thinks he has overstepped and is reaching.
Oh, sorry, I misunderstood. I have no idea. Not my area of specialization.

But what I gleaned from Don's post is that he thinks the trustee has misinterpreted (stretched to the breaking point) the relevant provision. As John suggested, that is the sort of debate the judge is employed to decide. As long as the trustee has a plausible argument that the statute empowers him to do this, even if he ends up losing, it is his job to advance the argument and try to maximize the value of the estate. If he has taken a position that is not even plausible, he could get sanctioned, and I think it is very unlikely he would take that risk.
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#6945 Post by Terry H a r r i s » January 26th, 2018, 9:52 am

Tenth Circuit decision today, upholding Colorado USDC adverse ruling against wine purchaser. Attached.
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#6946 Post by Michae1 P0wers » January 26th, 2018, 11:21 am

andy velebil wrote:
Dale Bowers wrote:Thanks for your insight. I wasn’t trying to be snarky. I was just asking if as a lawyer you think the trustee is acting within stated law as Don thinks he has overstepped and is reaching.
If you ask Neal this but change lawyer to cop he'll tell you the exact opposite. :P
Just my $.02, but if you change lawyer to cop in that sentence it doesn't make any sense, for multiple reasons.

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#6947 Post by Mike Cohen » January 26th, 2018, 11:32 am

Michae1 P0wers wrote:
andy velebil wrote:
Dale Bowers wrote:Thanks for your insight. I wasn’t trying to be snarky. I was just asking if as a lawyer you think the trustee is acting within stated law as Don thinks he has overstepped and is reaching.
If you ask Neal this but change lawyer to cop he'll tell you the exact opposite. :P
Just my $.02, but if you change lawyer to cop in that sentence it doesn't make any sense, for multiple reasons.
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#6948 Post by Steven Miller » January 26th, 2018, 12:17 pm

Neal.Mollen wrote: But what I gleaned from Don's post is that he thinks the trustee has misinterpreted (stretched to the breaking point) the relevant provision. As John suggested, that is the sort of debate the judge is employed to decide. As long as the trustee has a plausible argument that the statute empowers him to do this, even if he ends up losing, it is his job to advance the argument and try to maximize the value of the estate.
And he's betting (and appear to be winning the bet) that the vast majority of people he threatens will just write a check or negotiate. I value my time + the cost of a lawyer more than the cost of writing the check.

If enough of those getting sucked in pooled their $ and got a decent California attorney (there appear to a # of such here on WB) to challenge with a goal of reducing the scope of the clawbacks, that would be a good outcome for affected berserkers.
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#6949 Post by Mark Mason » January 26th, 2018, 12:48 pm

If a Lawyer can claw back money from purchases made 16 years ago and received later, that puts all my purchases at risk if the companies I do business with go bankrupt. This is a very, very scary situation. It was just normal business at that point.
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#6950 Post by Barry P » January 26th, 2018, 1:35 pm

Terry H a r r i s wrote:Tenth Circuit decision today, upholding Colorado USDC adverse ruling against wine purchaser. Attached.
Wow. This is no small thing. Seems to lead one to conclude that, if you pay your bills on time and don't carry balances, you have no recourse against credit card companies for goods set for future delivery and that are never delivered. CC companies must be doing a happy dance.
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