Thursday, August 26, 2010

Evidence of Trustee Impropriety in the Xyience BK Case


All communications bellow originate from Attorney Jon Backman, representing the Xyience estate on behalf of U.S. Trustee David Herzog.

date Tue, Aug 10, 2010 at 10:43 PM
subject Re: Updates?

hide details Aug 10

Rich ---

As I thought I mentioned last week, the Trustee will be in Vegas tomorrow to meet with me and the judge as part of the mediation process. I am going to discuss it then. As I told many months ago, the trustee already has agreed to the $5,000, but I need to walk through the $100,000 unsecured claim with him and, if he is on board,, then do a little politicking to try to ensure that no one (especially Laurel) will object when I seek court approval.

The agreement with Zinkin and the fighters last week removed Zuffa from the equation in terms of their strongest ground for objecting to a settlement with you, which is why we had to wait until August 3 to move this forward, but as I have told you in the past, Zuffa was not the only party that could seek to derail our settlement.

It is a bit frustrating on my end that you do not have a BK attorney. I understand why you do not have one, but the problem is that there are complex legal issues at play here that are impacting my ability to move forward with settlement. Unfortunately, since you do not understand the legal issues, you form the impression that I am stringing you along, but such is simply not the case. I am sorry that you are suspicious of my motives and integrity, but if you had a BK attorney advising you, then we would not have this problem. Hence my frustration.

I will be in touch as soon as possible.



date Fri, Jul 23, 2010 at 7:44 PM

Rich ---

If you are now prepared to accept the $5,000/$100,000 without further contemplation or equivocation, then I will check with the Trustee to confirm the $100,000 piece. As you know he already has approved the former, but not the latter. Please confirm that this is acceptable, without further conditions, and I will check with him. My intention would be to file the motion at some point within 2 weeks after the August 3 hearing. I would not expect to have time to prepare a written agreement prior to then inasmuch as I have multiple hearings and depositions in LV during the first 2 weeks of August.

I would have preferred that you not antagonize Laurel, because it is going to make my job more difficult, and I would prefer that, if we are proceeding with this settlement, you not resume your attacks on anyone else until it is approved. But those are just preferences, not conditions. Assuming the trustee approves the $100,000 piece, I will proceed with the motion.

Anyway, please confirm that the $5,000/$100,000 are acceptable, and then I'll discuss it with the trustee.



date Thu, Jul 22, 2010 at 10:13 AM

Rich ---

I agree that we do not need to debate the merits any further. We're not really too far apart on how we see things anyway.

I can't do the $5,000 sooner than September. Judge King has looked askance at setting hearings on anything other than his pre-scheduled Vegas dates; indeed, he has yet to allow us to proceed on shortened notice on anything; he certainly is not going to do so on this settlement, which has some complexities and, on its face, does not appear to an emergency,

As for the $100,000, it is contingent on my prevailing against the Fertittas and/or the other defendants. That's the nature of a liquidating BK of this sort. You would get paid with other unsecured creditors if/when they get paid. To the extent that you have a claim against Xyience, this is the right result. You are like the other creditors who got screwed by this company (and you would be ahead of shareholders, so if they get anything, then you'll have been paid in full already).

I hope this adequately explains it. I really cannot be any more definitive than this.



date Thu, Jul 22, 2010 at 10:28 AM

Rich ---

It would be imprudent of me to estimate the chances of your getting paid, because that would constitute a comment on my view of the Fertitta litigation. You have been involved in this matter long enough to know that fighting them is an uphill battle, but that the case has a lot of merit.

You would be on an equal footing with all other unsecured creditors, except about $100,000 in tax claims that probably would get paid first. Certainly a good result here would be a 50% recovery within 12 to 18 months from now on general unsecured claims, but that is as specific as I can get, and involves no promise, one way or the other, on my part.


***EDITOR'S NOTE*** Jon Backman met me face to face earlier this year in Bloomington, Illinois. The trustee David Herzog reportedly paid for that trip. The estate's liquidation trustee, Backman, gained a great deal of evidence and background from my complete cooperation with him for no consideration regarding the settlement. We didn't talk about any settlement (see last message) until after I ran down most of the key information, evidence, and major results of my investigation of Xyience at an Illinois coffee shop with Backman. I gave this information of my own free will outside of any settlement negotiation. He has recently made a number of different promises, some contained above, where he says he will speak to Trustee David Herzog and obviously never makes that meeting or conversation happen and refuses to deliver any real results. He promises to file a motion in August I never saw as much as a draft of. He promised to drop the initial Xyience case against me and never did. When I sat down with Backman he told me he used to be a lawyer who worked for big businesses and did some bad things he wanted to make up for. Yet, when given the full weight of the evidence to support the facts regarding other Xyience attorneys' culpability in corruption and fraud in this case, Jon Backman put making deals and getting "approval" from these same lawyers ahead of his normal charges and responsibilities as a trustee. ********************

Date: Tue, Feb 2, 2010 at 1:39 PM
Subject: Re: Meeting
To: Rich Bergeron

Rich ---

When we meet this afternoon, let's begin by focusing solely on what Xyience and its attorneys did wrong to YOU, and on your damages from that wrongdoing. I want to get my arms around what your personal damages are, separate and apart from your allegations as to what the Fertittas and Xyience have done wrong to the company, the shareholders, etc., etc. Although I know that, in the long run, your primary interest lies in the big picture, and although I too am interested in that picture, I want to keep the big picture issues separate for now from what your specific injuries and damages are, and what Xyience itself (through its officer and attorneys) did to cause these injuries. It is these latter issues that will be the subject of our settlement.

I'm heading into my last meeting. See you at or about 3:00-3:30.



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