Settling For Nothing: Fertitta Enterprises Gets Off With Slap on The Wrist For Bankruptcy Fraud

By: Rich Bergeron

      It always amazes me to see how much history repeats itself. Nearly the same scene that's depicted in the photo above unfolded at the Fertitta-owned Red Rock Resort and Casino recently. This time around, the banquet featured the entire current crop of Xyience employees celebrating a new settlement agreement to end the company's bankruptcy battle with the trustee's counsel Jon Backman.

    The settlement is disappointing when you look at how long the proceedings dragged on and how much promise there seemed to be in taking the Fertittas to trial. My own relationship with Mr. Backman was sometimes contentious. I often asked him what could be done for the shareholders.  He always told me they would probably recover very little or next to nothing. I pressed my own motion to suspend the bankruptcy before Backman took the case on for Trustee David Herzog.

     There were times Backman seemed to be doing whatever it took to seek justice while at other times I saw the stereotypical lawyer in him. Eventually I grew to understand he was in a tough position, but he amassed a catalog of evidence that began to build momentum leading up to the trial. He won a sanctions motion that he now has to scrap his rewards for to get a lowball settlement approved. Apparently, Backman didn't want to take his chances fighting the case in court, and he eviscerated his chances to prove that case in the settlement motion.

     Reading some of those sentences came as a real shock to me. The language had the tone of someone writing with a gun to his head. I attended a hearing in Las Vegas where Backman wiped the floor with his opposition: Attorney Greg Garman. The tide seem to be turning in the case, and my own experience with Garman led me to believe he really had no idea why his clients should have to pay for stealing the company out from under the shareholders. He knew the law, but he he didn't seem to know the case that well. He certainly didn't grasp the real circumstances that made this bankruptcy a borderline criminal conspiracy.

     Paying out anything to the trustee came at a price for the Fertittas, I suppose. I wouldn't doubt the negotiations featured discussions on how the settlement motion would be written to absolve the Fertittas and their employees of all possible implications of guilt or culpability. Just like the gangsters in suits depicted in the photo above, the Fertitta brothers have to appear respectable and spotless in the public eye while running their rackets behind the scenes.

   Mr. Backman seemed ready for trial recently, and he let me know at one point that I'd probably read about it in the papers before he could tell me how it was going. He didn't quite get that one right, because I'm the one writing about what happened rather than reading about it anywhere. If I weren't around, the Fertittas might have slipped this one right under the radar. That's unfortunate, but it's the world we live in. Thanks to people who continue to look the other way and let crooks be crooks, crime really does pay for gangsters in business suits these days. Just take a few hours and sort through this blog someday. Research the Fertitta bloodline. 50 cent was over at Floyd Mayweather's gym Tuesday being a ham for the cameras, but if he really wanted to find out how to be a gangster he should have been talking to Lorenzo and Frank Fertitta III. From their machine gun-toting security details to their stubble-ridden tough-guy mugs, these guys are the picture of organized crime in Las Vegas evolved to a totally new dimension.

   It really is depressing to see a company stolen right out from the investors who built it, but even more disgusting is how the Fertittas are planning to fold Xyience into Zuffa. They are literally and figuratively driving it like they stole it.

Russell Pike (parody)

     The company's current PR staff even made it a point to disavow any connection to the company's original founder, Russell Pike, when Pike was recently convicted of Tax Evasion to the tune of owing an estimated $1.5 million to Uncle Sam. Pike will be sentenced in July. By then, the Fertittas will be making millions emulating his original model of doing business: sponsor the UFC's fighters and the UFC to sell more low-rate supplements and other assorted overpriced items. The only thing they didn't do that Pike did was seek investors. The Fertittas and their insider friends wanted all the spoils for themselves. The UFC brass wanted a supplement company tied to the organization for a long time. Now they have one.

Xyience "Round 2" will flash the new marketing model at us all on free television soon by posting the Xyience logo back in the middle of the mat once again on May 5th for the UFC on Fox 3 card. It will be the first time the company's held that position on the mat since I helped expose how the Fertittas created a false bidding war for the middle of the mat space. Xyience defaulted on a multi-million dollar payment plan for that ad space while they were steaming toward bankruptcy, and the Fertittas had to know the company couldn't meet the terms of such a deal when they put ink to paper on it.

Money coming out one Fertitta pocket and going back into another would be a common theme through the case, and I kept finding new areas where the Fertittas found ways to pay themselves without any intention of their moves ever being made public. Yet, even when I exposed much of this behavior, they managed to get away with it all and did not even have to suffer a real civil penalty. These guys have become the kings of insider dealing, influence peddling, and lawyering up to beat the band.

      Lorenzo and Frank Fertitta managed to erase billions in Station Casinos debt through the bankruptcy courts, and they bought all their over-leveraged properties back for a bottom dollar bid at the tail end of the process. They used Xyience as a trial run, an experiment of sorts. It wasn't long before the lesson learned came to be: bankruptcy can be extremely profitable if you play the game correctly. I arrived in Vegas on my last trip out during a time period where Station Casinos was still on the way out of bankruptcy. They were advertising a car a day give-away. Later on I read some reorganization paperwork that showed Station Casinos simply defaulted on the payments to the dealerships involved. The dealerships no doubt wrote off the losses as part of their insurance program, and the folks with the free cars made out like bandits. It's the kind of magic that can only happen in Las Vegas.



This is why the Fertittas themselves are very rich individuals who always make the Forbes list. This is what business-suited gangsters do. There's nothing better than selling something you got for free. As casino owners, the Fertittas must maintain a resolute appearance as upstanding young men who are law-abiding citizens. Billions of dollars could literally be at risk if they were ever caught up in any kind of criminal charges. Bankruptcy fraud seemed like a fair charge when I first levied it against them with a motion to suspend the bankruptcy. Their juice and my lack of an attorney led to a judge paying my motion no heed. The Fertittas steamrolled the company through bankruptcy with relative ease. It was like a bank robbery broadcast on national television where a million tips come in because everyone knows the robbers. Yet, nobody gets cuffed in the long run. Nobody is told to pay for their transgressions or provide any relief to those who suffered through these long years hoping something tangible would come out of the court process.

 I currently have a motion seeking $150 million in relief for sanctions against a wide array of parties implicated in the bankruptcy. There has never been an appropriate hearing on that motion, and it would require a ton of testimony to do it right. It's not a task I take lightly, and it would be a gargantuan effort to bring that hearing to fruition. Still, I am determined to do what it takes to play my part in this and provide whatever shred of justice I can.

XYIENCE BANKRUPTCY TRUSTEE FINDS DAMNING EVIDENCE AGAINST FERTITTAS, PUSHES FOR SANCTIONS THIS FRIDAY

By: Rich Bergeron

Forbes dropped a gem of a story on their Web-site on September 13th about new claims leveled at the men who bankrupted Xyience. Allegations brought by the company's bankruptcy trustee, represented by Attorney Jon Backman, point to an effort to hinder the trustee in acquiring evidence in a case against Fertitta Enterprises, Zyen, and Zyen's General Manager William Bullard. What's worse, recent documents in the case reveal that company officials at Xyience and Fertitta Attorney Greg Garman hatched and executed a deceptive plot to hide or deny access to the most incriminating material.

Unfortunately, despite all this dedicated trust lawyer's hard work, the Forbes piece didn't even spell his name right. BACKMAN will ask the court for sanctions this Friday in what could be one of the most important hearings in the case so far.

One man mentioned repeatedly in the documents filed by the trustee recently is Michael Levy. Levy still works as a general manager of sorts at Xyience these days and goes by the title of Chief Financial Officer. Page 6 of a September 1, 2011 sanctions motion describes how Levy reacted to an inquiry about electronic data:

If it were a criminal case, Backman's claims could be considered obstruction of justice. Much of the controversy behind his bold claims is a direct result of the refusal of key parties to turn over critical evidence. A big issue arose when the company servers came into play. Suddenly these crucial servers containing countless emails were damaged after a system crash and would have to be repaired for 10-12,000 dollars. Constant delays seemed to plague the process by which Backman sought to seize and examine these servers and comb them for information pertinent to his case.

Despite the roadblocks thrown up by his adversaries, Backman did manage to find a few nuggets of gold while panning for truth. A company called PC911 handles much of Xyience's computer issues. A technician from PC911 named Chad Stone (and he's not smooth like Keith Stone) admitted to lying to support the case in a signed declaration. The admissions came during a subsequent deposition on May 4, 2011. The Trustee's Counsel called Stone's written declaration "Pure Fiction." Backman went as far as to suggest that if the legal system's design didn't protect Stone, Xyience computer specialist Devin Keays would have a case for defamation against Stone based on his false testimony about Keays. Keays was forced out of the company during Xyience's push to bankruptcy in early November of 2007. Stone falsely suggested Keays was the one to blame for the server issues.

According to the Trustee's September 1, 2011 motion:

During a Times Square meeting on November 15, 2007, within two weeks of Keays leaving the company, Adam Frank and Kirk Sanford told me personally that bankruptcy was the only solution for Xyience. Emails and other electronically stored information from this time frame is crucial to the trustee's case. If there are full backups of the servers available, they may contain some huge bits of communication between company officials like: Former Co-CEOs Adam Frank and Kirk Sanford; Zyen General Manager William Bullard; Fertitta Enterprises Owners Lorenzo and Frank Fertitta III; Fertitta Enterprises Lawyer Greg Garman; and CFO Michael Levy.

Eventually, the company that reportedly had possession of the drives and servers in question analyzed them, and another contracted company provided a detailed report of what they found. Upon looking at the resulting report, Devin Keays informed Backman that the company that checked the drives analyzed the wrong ones and did the work on drives the trustee already had all the information from. Apparently there was some kind of bait and switch game going on. Another Las Vegas based firm examined all the drives and found none of them had any signs of containing email server information. So the electronic information Backman initiated a campaign to discover was never even on the target drives company officials led him to. Was it a simple mistake or a bold-faced lie that led to these developments? The trustee's counsel asserts that it doesn't matter how the mishap occurred, because the evidence shows the company, their attorneys, Bullard and Levy all had a duty to preserve evidence pertaining to the bankruptcy and failed to do so. Backman calls his adversaries' behavior in the situation "by no means innocent or excusable."

Another snippet from the September 1, 2011 sanctions motion filed by Backman in the case explains further:

The motion further alleges that the principals involved in obscuring, eliminating, or inadvertently misplacing evidence in this scenario should essentially know better. At worst, they possibly engaged in this scheme intentionally, with the specific purpose of confusing and confounding the trustee's campaign to discover the truth behind the forced bankruptcy plot. Whatever the case, Backman requests compensation for being sent on the wild goose chase due to the responsibility of the named parties to protect and preserve the electronically storied information that is now unaccounted for. Backman asserts, "...defendants and their counsel repeatedly, routinely, unabashedly, and unapologetically have violated the discovery rules relating to electronically stored information as such rules are set forth in the Federal Rules of Civil Procedure and the controlling case law, and have been for many years."

The trustee's argument makes sense, especially considering the thorough support cases he cites. Whether or not his adversaries physically destroyed or "lost" the information by accident or on purpose, they had a defined duty to make sure the information could be made available for inspection. So, whatever happened to it and wherever it is isn't the point. The fact is the company and their attorneys had an obligation to retain it and provide it when requested to do so. Even if there's no smoking gun to show the disappearance of the information was willfully orchestrated by certain parties, it is incredibly suspicious that this block of communications conveniently vanished.

The primary perpetrators of the questionable conduct associated with the entire evidence debacle, according to Backman, were CFO Michael Levy, Attorney Greg Garman, and Zyen General Manager William Bullard. These individuals acted in a manner that made the server requests and other inquiries harder to fulfill, Backman reports in the September 1, 2011 sanctions motion:

An August 8, 2011 email from Attorney Garman attempts to justify the back story behind the missing evidence. He further explains that he personally participated in fruitless searches for pertinent records that Backman requested. The Garman letter is included as Exhibit 6 to Backman's September 1, 2011 sanctions motion. The final paragraph contains language that indicates how frustrated Garman is regarding the approach of the trustee's counsel. Garman appears to have let his emotions get the better of him when he concluded the letter with the following words:

Backman includes multiple lengthy exhibits with his motion, including snippets of deposition transcripts and other documents that lay a foundation for his claims. Part of one of the later exhibits is a peculiar letter from one of the only Xyience executives I invested any good faith in at the time just before the company changed hands and entered into the foreclosure and forced bankruptcy. William Underhill had a background in restaurant management and actually helped prosecute fraud in his former work experience. Xyience tapped him to take over the company just before the final collapse. He later resigned from the board with a shot across the bow at the tactics used to cause him to walk away so suddenly, and he sent the resignation email on Halloween, 2007. His "reluctant" formal resignation letter speaks volumes with hindsight being 20/20.

Backman's own communication to multiple Fertitta Enterprises lawyers--directed primarily at Joel Z. Schwarz (left)--stood out among the rest as the last exhibit to his motion. The date of the email is October 20, 2010. The tone of Backman's message is one of clear frustration with the way Schwarz and other members of his firm are actively trying to deceive him. Click here to view the most scathing paragraph of Backman's email.

It is clear the email is a result of pent up feelings of mistrust between the tireless underdog Illinois attorney and the big city Las Vegas law dogs at Gordon Silver who are playing on a home court. These same lawyers are likely hoping the judge won't throw the book at them this Friday. That's when he will likely hear more about allegations that these well trained legal eagles avoided their responsibilities to the rule of law and obstructed the trustee's formal inquiries at every turn. A hearing in Las Vegas at the bankruptcy court will allow both sides to present their arguments for or against sanctions to apply here.

Even my name made a cameo appearance in a list of emails said to be "not relevant" to the liquidation trustee's cases. Some of the documents leading up to this last sanctions request lay out the path of evidence perfectly. A previous sanctions motion filed by Backman on August 20, 2011 featured some potent charges and even more nuggets of gold. Exhibits G (an email from William Bullard to Lorenzo Fertitta) and H (an email between Bullard and both Fertitta brothers: Frank III and Lorenzo, Click Here For Part Two) were bombshell findings, and these are the emails that were actually discovered. One can only imagine what hasn't been found yet. Where there is smoke there is fire, and it certainly appears that these guys were ready to barbecue Xyience as soon as the coals were hot enough. The conditions were ripe. There was a way to "muzzle" Xyience Founder Russell Pike according to Bullard in that Exhibit H email message chain from August of 2007. If that's not convincing enough evidence that something's rotten in Denmark, consider the relevant portions of William Bullard's deposition transcript Backman included in Exhibit S.

Friday will be an intriguing day for the trustee if the judge on the case can see the clear pattern of deception involved here. It should be a slam dunk motion, barring any hometown cooking affecting the outcome.

NOT SO "TRUST" WORTHY AFTER ALL (PART 2)

By: Rich Bergeron

David R. Herzog is the Liquidation Trustee for the Xyience, Inc. bankruptcy I am embroiled in out in Las Vegas, Nevada. He and I have had limited personal interaction by email and never met in person. Instead, Herzog left the meeting and conversing up to an assistant of sorts who takes care of all the details in complex cases like the Xyience saga.

Jon Backman (at left) is Herzog's counsel, and so far he's handled much of the grunt work for Herzog regarding the bankruptcy and several adversary cases filed against those who allegedly defrauded the company in past years.

I met with Backman myself this past February, and I shared a great deal of information and evidence with him. He used some of the paperwork I provided him to prosecute his cases against some of the perpetrators who swindled Xyience along the way. We worked well together while it lasted, and as we tried to hammer out a settlement, I provided a few more clues and some important insight. Over time, though, it appeared to me that Backman was stringing me along, promising to take action to help me only to fail to follow up on multiple occasions.

For instance, Backman agreed time and again that the company's initial $25 million case against me should be dismissed, starting with his first contact with me in December of 2009 (CLICK ON IMAGE BELOW TO SEE FULL SIZE):



It should have taken Backman just a few hours time to draw up a motion for dismissal, serve it, file it, and get a hearing. Instead, he apparently did nothing but ignore my case. After a while, I started to understand the reality of the situation and that this guy might not be the kind of champion lawyer he seems to want to pretend to be when he needs something.

I decided I would have to file first to get Backman and Herzog to take me seriously, as Backman insisted the maximum amount Herzog would settle for would be $5,000. Even when I agreed to that amount, though, Backman never showed me as much of a draft of any pleading. He also never provided a draft of any agreement that stipulated our terms or any written timeline for any realization of such a settlement. The communication was all only by email and by phone. Nothing with a signature. It is a prime example of flat out, pure legal delay. Backman and Herzog simply sat on this case like all the lawyers before them did.

THE BEGINNING OF THE END

Eventually, I broke off communication completely with Backman. I told him I was going to block all his email accounts, and I dropped off his radar for a while. Meanwhile I compiled the legal documents it would take to blow this case wide open. During my time formulating these crucial filings, I decided it would be a good time to give Mr. Backman one last opportunity to save face for his own sake and for the estate's benefit. I sent him an email message telling him a few hints about my plans to file new material and offering one last chance for a civil conversation if he wanted to call me. Not long after I sent the message, he called. We compromised yet again (The first settlement was supposed to pay out $5,000 to drop the estate from the counterclaim and the sanctions motion claims), and Backman made another new offer:

Thanks Rich. Have you filed your amended defamation claim? If so, would you email it to me?

Do you want to do a settlement as follows:

1. I pay you $5,000 for the Rule 9011;

2. I dismiss the claims against you;

3. You are allowed to pursue the remaining defamation claim against the company (which I would defend, and perhaps we could settle down the road).

If so, then I would recommend such a resolution to the trustee.


Jon


I accepted these terms, and I made it clear I wanted Backman to move on it as soon as he could. He sent the above email to me on November 4, 2010, and we continued being civil and trying to work things out for almost two more weeks until I began to realize more pressure needed to be applied to get Backman to do anything on my case. I knew I needed to file my latest pleadings and affidavits. So, I sent Backman and Herzog everything by email first, on November 15th, although I didn't have digital copies of the exhibits for the summary judgment motion and had to send those by snail mail.

Here's most of what went out to both Backman and Herzog that day:

Xyience Case Brief in Support of Summary Judgment By Rich Bergeron


Affidavit in Support of Summary Judgment in Bergeron vs. Xyience Bankruptcy Case


Designation of Evidence For Motion For Summary Judgment


Motion For Summary Judgment


Affidavit In Support of Motion to Amend Sanctions Motion in Bergeron vs. Xyience Bankruptcy case


Xyience Case Motion to Amend Rule 9011 Sanctions by Rich Bergeron



I expected at least some kind of backlash from Mr. Backman of course, as much of the pleading material involves descriptions of my frustration with this attorney's behavior in support of fellow attorneys I'm seeking sanctions against. Instead of getting an immediate missive from the man himself, though, I was fortunate enough to get an email meant for him from the guy he was supposed to be representing: Liquidation Trustee David R. Herzog. The intercepted communication, obviously sent to me by accident, apparently never even made it to Backman's inbox. Since it was unrelated to settlement negotiations it is both admissible in court and ripe for publication, so here it is:

Gee Jon, and here I thought you were pursuing all these claims. Oh sorry I forgot, your not nearly the atty that Rich Bergeron believes he is; oh yes he is a legend in his own mind. Here is my concern, how do we get rid of this frivilous garbage without you spending gobs of time. I'm sure he doesn't comply with local rules if they are anything like the Northern District. You always told me he was crackpot, these pleadings prove it.

David

I SHOT RIGHT BACK WITH THIS:


David,

Disrespect will get you nowhere.

You probably didn't realize you sent this to me as well.

This "crackpot" gave your counsel a lot of information and
documentation on Xyience. This information helped win your cases. Mr.
Backman still doesn't even seem to know what my case is all about,
though. Neither do you.

I'm glad you just gave me more evidence that he's defamed me as well.

Not too smucking fart for a guy who's supposed to be a REAL attorney.

Good Day,

Rich

HE RESPONDED LATER (NOTE HIS MIS-SPELLING OF HIS OWN COUNSEL'S NAME) BY WRITING:

Sir,

Making threats to us does not resolve the situation. Bachman has made tremendous efforts in pursuing the litigation against the Fertitas and the other wrongdoers. Your disparaging remarks against him in your pleadings are reprehensible. What more can we do but vigorously pursue this litigation. I apologize to you for calling you a "crackpot" but let him have the peace to do his work undistracted by your litigation.

David Herzog

AFTER A FEW MORE BACK AND FORTH EXCHANGES HERZOG GAVE UP ARGUING:

Rich,

I don't want to bicker with you further, do what you think you need to do.

David

BACKMAN'S THOUGHTS ON THE LIQUIDATION TRUSTEE'S ACCIDENTAL FOOT IN MOUTH EPISODE WERE EVEN MORE REVEALING AND INTRIGUING UNDER THE CIRCUMSTANCES:

Rich ---

Apparently, David inadvertently sent the email to you when he meant to send it to me. Like I, he is quite distressed by what you have written in your motion to amend the sanction motion, and in the summary judgment counterclaim, both of which will distract my attention from critical matters in the Zyen/Fertitta case. I restrained my tongue because I know that getting into arguments with you about the damage you are doing to the case is pointless. But David was venting his frustration, thinking he was writing to me, but inadvertently sending it to you.

As for your comment that the remarks are slanderous, they are not because David did not publish them to anyone. They went solely to you.

David tells me that you and he exchanged further emails, but I have not seen them, so I can't comment. If you share them with me, then I will do so.


Jon

=====================================

Rich ---

I do not care whether you believe me. I did not receive David's email until you sent it to me. In fact, even when David emailed me to tell me of his error, he did not send me the email he had sent to you. As for Rule 9011, it has nothing to do with an email between an attorney and his client.

That being said, I regret that the events of today have occurred because, as you know, I have attempted to move past fighting with you, and have just accepted that you are going to do what you do --- and say what you say --- regardless of what I say. I did not like either of your motions, but I'll deal with them. There really is nothing for us to discuss about them: you have attacked my integrity, but I am a big boy and can take it. You should do the same with David's email to you and just let it go.

We'll speak soon I'm sure.



Jon

=====================================

Rich ---

I have to run to a meeting, but for the record, I never called you a crackpot. As I have told you, I believe that you are abusing the legal system with some of your pleadings, and I believe that, to some extent, because you are smart and hard-working, but severely misdirected, you can be dangerous. But I do not view you as a crackpot, and would not have used that term in describing you.

We'll speak soon.



Jon


FINALLY, BACKMAN DECIDED TO PLAY HARDBALL AND GIVE ME AN ULTIMATUM (WHICH I REFUSED TO BACK DOWN OR CAVE IN TO), OBVIOUSLY PUTTING HIS AND HERZOG'S OWN SELF-INTERESTS AHEAD OF THE ESTATE'S:

Rich ---

I don't know what you are trying to pull, but there is zero chance that the Trustee would settle your Rule 9011 claims, but let you bring a Rule 9011 motion against us the day after we paid you. We'd have to be out of our minds to do that, because then we'd be paying you $5,000 for nothing. At this point, we have not filed anything in your case, so you have no basis to file a Rule 9011 motion against either of us. In fact, if you did so, then you'd be subject to severe sanctions. And I am not going to file a settlement motion, or anything else, until you have signed an agreement saying that you will not pursue Rule 9011 motions against David or me. That was always the deal, and you know it.

Bottom line, and no further discussion: If you insist on retaining the right to pursue a Rule 9011 motion against the Debtor, the Trust Estate, David or me, then there is no settlement --- period. This is not negotiable. And if you do not accept it by 5:00 p.m. my time this evening, then our discussions are at an end, and we will cease responding to your email or speaking with you any further.



Jon

And now, because Backman and Herzog never volunteered any pleadings or demonstrated any general effort to move this case in any real direction, they use this fact as a sword against me. They claim this means they are not subject to Rule 9011 Sanctions, but they neglect to consider how liable they are for general sanctions. The problem with their backwards logic is I know the law.

The sanctions motion is not strictly a Rule 9011 motion. The motion asks the court to initiate its own ability to sanction offending parties. The pleading asks the court to provide sweeping relief for those injured by the blatant abuses of process and incessant delays wrapped up in the case. Backman and Herzog perpetrated much of the most recent delay, and at this point there is no reason not to name them to the amended motion for sanctions if I am given a chance to amend that motion.


I'LL SEE YOU IN COURT

Well, since I live thousands of miles away from the venue I won't actually see anyone in court, but I will seek a hearing and ask to appear by telephone. At that point there should be another item on the docket describing the events I've shared here. All the attorneys I've faced thus far in my budding pro-se career in law have demonstrated an extreme lack of integrity when backed into a corner. So many lawyers and people who can afford to hire them seem to live on that timeless threat, "I'll see you in court." Most of us who can't afford to engage a lawyer or don't have enough time or energy to become one end up forced to negotiate or backpedal or compromise our own integrity to deal with people who drop this threat on others with impunity.

I couldn't afford any type of legal assistance, and I wasted a lot of time trying to find it when I felt overwhelmed by this case in the early days. I did it myself, and so far that's been the best decision I've made. I don't think I'm the best lawyer on the planet or anywhere close to it. I don't think I'm a better lawyer than Jon Backman or most lawyers in practice in this country.

If I had to give my honest opinion of how good a lawyer I really am, I'd have to say I suck at it. But, then again, I don't want to be a lawyer anyway. I never did want to be one. I was forced to.

The real issue is not what kind of lawyer I am, but what kind of person I am. I'm honest, and painfully so. Some might say this high level of integrity means I could never be a proficient lawyer. Again, I don't mind, because I don't want to be an attorney anyway.

As my own legal representative, I have no attorney/client privilege. I have virtually no chance of being in front of the same judge again on another case. I won't have to face the opposing lawyer in another case, either. I don't have to make deals or play nice or rack up huge fees to fatten my paycheck. The pay is virtually non-existent and highly dependent on a favorable outcome(which has taken me longer than three years to get anywhere close to), but the work is meaningful and the victims are worth fighting for. More than anything the work I do requires a sincere and earnest sacrifice of my time for the benefit of the greater good. I have to be selfless by very nature just to keep doing it without reward or much in the way of sustainable funding. There's no guarantees, no quick fixes, and no great hope of full recovery at this rate. Yet, someone has to step up and try to do this work, anyway, and I don't see anyone else in line waiting to do it for me.

The initial shareholders of this company were swindled out of their investments. Many of them lost college funds, family trusts, and retirement savings as a result. The Fertittas promised to keep the company viable by taking their chief lien position with the help of a "private investment group." Instead, they killed the company, with help from their friends and associates. I took up the story a long time ago and tracked these transgressions from day one up to the present. I watched it all happen and warned others that it would happen before it did. I did an ominous amount of work for a microscopic amount of money. When you are in that position there is simply no time for greed or corruption to kick in if the effort is to remain true and sincere. You have to always focus on the long term, the goal to take back what was stolen from all those shareholders and their families.

I've done about as good as anyone could expect of an amateur lawyer. I've come to learn a great deal about the way the legal system works and doesn't work. I've seen how the system breaks down those who aren't willing to conform to its strict guidelines and rules. You have to be willing to get a little antiquated with your format and writing style if you want to be a halfway decent attorney, and I've spent more than a few all-nighters figuring that out the hard way. Today I'm better off because I kept trying, and I have a more compelling life story as a result of this struggle, but the journey has still been painful. The fight that rages on is still stressful and agonizing. The work never seems to get any easier.

Nobody in it for the wrong reasons could ever get this far, and one day Mr. Herzog and Mr. Backman might figure that out. They can underestimate me and dismiss my efforts as confused and misdirected all they want right now, but the truth will speak for itself in the long run. I didn't do this for fame and fortune. I don't have a greedy bone in my body.

I don't work for free to stroke my ego. I don't keep plugging away for hours on end with this work thinking it's a get rich quick scheme. I don't do this because it's my job. I do it because I am proud of it, I believe in it, and nobody else is in any position to do it the right way and with the right intentions in mind. My motives are pure and my conscience is clear.

I can't pretend to know what thoughts are going through the minds of Backman and Herzog at the moment or what their actual motivations and driving factors are. However, I do know that--no matter how much better than me they think they are at lawyering--their apparent character flaws will not be washed away by technicalities and nuances of process. I will expose these flaws here and everywhere else I think it's relevant to do so, and not just because I can or I think it makes me look better in comparison. I'll do it because it needs to be done, and it's simply the right thing to do.

Donate To The Truth & Justice Legal Fund

Support A Great Cause: DONATE TO HELP FIGHT FRAUD

By: Rich Bergeron

Justice is not easy to obtain when you face as many adversaries as I do and the list of perpetrators keeps on growing. I have been engaged in some capacity in litigation designed to silence my work in three free states in this free country. Only one time has an injunction stood in the way that completely interrupted my efforts, and I'm not even a party to that case.

I recently broke off all settlement negotiations with the Xyience Liquidation Trustee's Counsel Jon Backman. I refused a $105,000 settlement offer because of a series of broken promises, constant changes to the plan of execution for the settlement proposed, and because $100,000 was unsecured AND in front of the shareholders I've been fighting for since the get go. I was offered $5,000 up front and told that was the maximum amount the trustee would allow. Then I was told I'd only get $2,500 up front and $2,500 when the deal was approved. That was not the way that "up front" payment was described when I initially agreed to this settlement.

I made my own changes in the end and told Mr. Backman that the only "deal" I would accept would be $6,000 paid by September 1, 2010. I knew the only way that deal would be done is if it was paid out by the TRUSTEE. I didn't want to even get involved in an unsecured claim, but if I did and I recovered even a fraction of what I was supposed to, the $6,000 should have been a much easier and less expensive option for the trustee to accept. Instead, they balked at the counter offer, and I vowed to fight on no matter what.

Because of my recent Open Letter to Jon Backman, some new developments have surfaced, and I have been getting lots of phone calls. I have blocked all of Mr. Backman's email addresses and told him if he wants to talk he can call me direct or send me a letter by postal mail. Either way, there is no chance of a future deal. I am convinced the trustee's attorney abused his charge and acted improperly to shield the lawyers involved in this fraudulent bankruptcy so he could get their approvals on certain aspects of the case. He also seems to be wanting to make sure these individual lawyers and firms get paid in full for their legal work designed to obscure the facts and insulate the worst of the worst perpetrators from culpability.

I am doing everything I can to bring this case back to the forefront. I also need to work to expose the latest developments and the stalling that precluded my decision to drop all hopes of a settlement. All a settlement would have solved would be to remove the estate from my counterclaims and the Rule 9011 motion still before the court and not yet heard.

Instead, Jon Backman will be among those I request in my next motion to be added to my amended 9011 motion for $150 million in sanctions related to the fraud, delay, and frivolous nature of the initial suit against me that started all this. Mr. Backman has gone as far as suggesting Rule 9011 could not possibly apply to him since he never filed a document in my case.

This is just another unfortunate example of an attorney who knows less about certain aspects of the law than I do. Either that, or he's just pretending not to know the nuances of Rule 9011. One of the principal reasons for Rule 9011 to be brought to bear in a case like this is due to DELAY perpetrated by an attorney and/or party, and the spirit of the rule is to serve as an abuse of process claim in the bankruptcy courts. It does not require an actual filing to be made by the offender and also regulates conduct or lack thereof that can be considered abuse of process or needless delay.

All the evidence is pointing to Mr. Backman making moves to intentionally delay me getting fair relief while at the same time allowing approval of all the billing for the attorneys who perpetrated the whole Xyience bankruptcy fraud. These attorneys aided and abetted all the USUAL SUSPECTS! Backman's protection of these lawyers is unacceptable and truly despicable considering his refusal to do anything significant to help me after I dumped a huge pile of evidence in his lap.

I met with Backman in Illinois in February, and I was paid $750 for travel, a payment that was generated very quickly by the trustee. Why the same trustee can't approve $6,000 flat when it was a $99,000 discount given to the estate under the circumstances, I just can't explain. The evidence I gave Mr. Backman was brought to bear against a great deal of the same usual suspects I'm pursuing in regards to sanctions.

Backman's adversary cases hit the docket years after my investigation began and utilized years of my research (including documentation) volunteered to him for no financial consideration whatsoever. I am sure he's recovered way more than $6,000 based primarily on evidence I gave him and avenues of research I pointed him toward. Yet, instead of working with me, Mr. Backman seems to be taking the word of some questionable characters with lots of skeletons hidden in their closets from the old days at Xyience before the Fertittas became involved.

Backman's behavior leaves me no choice now but to lump him in with my adversaries and fight this whole case on my own dime. As such, I need to generate some kind of a budget however possible. I ask anyone who can spare something toward my tireless efforts to donate what you can. Click on the donate button below to support my truth and justice fund. Stay tuned to this site for future updates, which will be more frequent than usual over the next few weeks.

I keep track of all my donations and will pay back every cent with interest upon earning any judgment.

OPEN LETTER TO ATTORNEY JON BACKMAN, XYIENCE COUNSEL FOR THE LIQUIDATION TRUSTEE DAVID HERZOG

Open Letter to Xyience BK Estate Counsel Jon Backman -

Xyience, Inc. Liquidation Trustee Files Complaint Against Fertitta Enterprises And Former Company Executives

Latest Xyience Case Update

By: Rich Bergeron

The Usual Suspects, including all the characters pictured below and Fertitta Enterprises GM William Bullard, are implicated in a new civil suit. The case, filed by the Xyience Bankruptcy Liquidation Trustee David Herzog Tuesday, is finally unearthing the scandal I've been reporting on here on this site for more than two years now. The complaint is very thorough, but I've created a CONDENSED VERSION HERE.



The characters and circumstances involved are nothing new to me, but the vindication of my own complaints is new. This is the official legal representative of Xyience finally picking up the story line I've been laying down for over two and a half years now. The judge in my own case will no doubt be more willing now to admit my case is substantially sound and worthy of a second examination. Read the complaint for yourself and take the time to look back at all my reports here, and you'll see they name all the individuals I've been complaining about on this site for years. Here is the full version of the complaint:


Xyience Liquidation Trustee Complaint -