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.

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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 -

Putting the Xyience Story To Bed & Waiting For The Ultimate Judgment Day

By: Rich Bergeron

It is so hard to even imagine the day when the Xyience sage will really be over for me. Back when all this began I had a feeling it might be the kind of story that could define my career someday. It’s been nearly two-and-a-half years since the lawsuit paperwork reached my inbox. The court battles have been contentious and frustrating for the most part, but certain points were strangely fun.

I enjoyed more than anything the opportunity to call out the opposing lawyers along the way who always tried to back me into a corner with technicalities. None of them bothered to gather any substance or concrete evidence. They attacked me with lies upon lies, a foundation of falsehoods for a case that never had merit on their part. They defended their own subversive and manipulative behavior to hide the truth and decried my methods of revealing it.

For me, rather than reflecting negatively on all the days I’ve had to spend crafting motions and doing legal research or trying to calculate the total wasted hours, I look at my accomplishments by the numbers:

I’ve managed to keep this case moving through the system through 3 different judges before Bankruptcy Judge Mike Nakagawa took the matter over.

Judge Timothy Williams, the gentleman endorsed by Station Casinos for his campaign for the bench, was the first obstacle. Judge Williams signed the existing, un-enforced bogus injunction secured by the first lawyer on the case: Jamie Cogburn. By the time I appeared to argue against the application of a default judgment, Williams had warmed up to me a bit for at least trying to be a lawyer with all my might.

Click Here to read the throwback report on that first success before Williams that I argued a bit too hard for (recording included) but got anyway.

Williams eventually stepped down due to some coincidental connection to one of the law firms involved once Jamie Cogburn quit the case with an outstanding bill. The case spent a brief period under the guidance of two other Clark County, Nevada judges before being transferred to bankruptcy court and Nakagawa.

Four law firms couldn’t shut me down through the worst of conditions with all the odds against me.

Cogburn’s took a crack at the case and failed first. He famously offered to settle with me for “a box of sodas” and “a thousand dollars” when he was the one who first filed the case against me. It was yet another small victory knowing Xyience left him a huge unpaid balance.

Then Pamela Lawson of Hunterton and Associates took on Xyience as a client without even knowing how to pronounce the company’s name. She was easy to make fun of, and not just for me.

Fennemore Craig’s legal team of Laurel Davis and Jon Pearson never really lifted a finger to further their case, playing the defensive role through their whole involvement. Most of their hard work was done by the Fertitta Enterprises team fighting my counterclaim as a co-defendant of Xyience’s. The Fertittas had Gordon and Silver’s Greg Garman and Matthew Zirzow doing their dirty work, and these attorneys took some of my worst verbal barbs in writing and in spoken word at the bankruptcy hearings. I called Garman a clown twisting balloon animals for the court and hoping to amuse the judge at one hearing. I called his clients at Fertitta Enterprises thugs in business suits and corporate crooks.

The fifth firm is the liquidation trustee, and there no longer appears to be a need to fight these first legal minds outside of Nevada to handle the estate’s litigation streams. These folks are finally on my side and ready to put this long story in the proper perspective by concentrating all our combined legal efforts on the main culprits. They are already pursuing some of the same bad apples I’m after.

I’ve handled these legal matters in both local and federal court systems, all the while living thousands of miles from the venue. I’ve been flown to New York by my adversaries and to Las Vegas by some Xyience shareholders. I’ve been offered as much as $5,000 to walk away. I’ve spent about that much through the course of the litigation on associated costs, but never for any paid legal advice.

I even wound up taking on a fifth judge (judgegod.com) and a sixth law firm (www.lewis-kappessucks.com) in Indianapolis due to an unrelated book project involving a plastic surgeon’s most outspoken online critic. I started www.suckssite.com as a resource to all those Americans out there in need of an effective outlet to gripe about the things that irk them the most.

I’m hoping the days ahead might afford me the opportunity to stop being a lawyer and start being a writer again. More than the prospect of spending any settlement money on my formal law school training, what really intrigues me is using the funds to travel to appropriate research points for an all-inclusive book project.

The Ultimate Judgment will eventually come down against the Fertitta Enterprises crew and all the other individuals and entities involved in bankrupting and using Xyience to further their own needs. I’ll be involved with the trustee’s office every step of the way, but in a limited role so I’ll have time to write the story. A few more reports here will take us to the end of this whole saga’s Online life. From there the Xyience tale will grow to new heights as the only written expose to fully reveal the Fertittas for the true scumbags they are.

Stay tuned in the coming days as a new report is coming soon about some other "Usual Suspects" who moved onto other scams after bilking Xyience. I'll explore one of the trustee's other complaints and the defendants in that claim.

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 -