SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES DEPARTMENT NO. 308 HON. JANE L. JOHNSON, JUDGE THE PEOPLE OF THE STATE OF )CALIFORNIA, ) ) PLAINTIFF, ) ) VS. ) NO. LC094571 )THE LAW OFFICES OF KRAMER & )KASLOW, ET AL., ) ) DEFENDANTS. )______________________________)

REPORTER'S TRANSCRIPT OF PROCEEDINGS

FURTHER PROCEEDINGS ON EX PARTE APPLICATIONS

WEDNESDAY, OCTOBER 19, 2011

(APPEARANCES ON NEXT PAGE.) DANA L. SHELLEY, RPR, CSR #10177 OFFICIAL REPORTER

APPEARANCES: FOR THE PEOPLE: STATE OF CALIFORNIA

DEPARTMENT OF JUSTICE OFFICE OF THE ATTORNEY GENERAL BY: JAMES TOMA TINA CHAROENPONG

DEPUTY ATTYS. GENERAL 300 SOUTH SPRING STREET SUITE 1702 LOS ANGELES, CA 90013 (213) 897-2128

FOR PLAINTIFF CALIFORNIA THE STATE BAR OF CALIFORNIA STATE BAR: BY: BLITHE C. LEECE DEPUTY TRIAL COUNSEL

1149 SOUTH HILL STREET LOS ANGELES, CA 90015 (213) 765-1161

FOR THE RECEIVER: BALLARD SPAHR

BY: DANIEL M. BENJAMIN 655 WEST BROADWAY SUITE 1600 SAN DIEGO, CA 92101 (619) 696-9200

FOR DEFENDANT KRAMER: M. JONATHAN HAYES

9700 RESEDA BOULEVARD SUITE 201 NORTHRIDGE, CA 91324 (818) 882-5600

FOR DEFENDANT STEIN: ERIKSON M. DAVIS

11574 IOWA AVENUE SUITE 104 LOS ANGELES, CA 90025 (310) 231-7808

MJS & ASSOCIATES BY: MITCHELL J. STEIN IN PROPRIA PERSONA 28720 CANWOOD STREET

SECOND FLOOR AGOURA HILLS, CA 91302

(877) 475-2448 FOR DEFENDANT STEPHENSON: BILL STEPHENSON

IN PROPRIA PERSONA 21741 CRIPTANA MISSION VIEJO, CA 92692 (949) 892-7446

1

1 CASE NUMBER: LC094571

2 CASE NAME: PEOPLE VS. KRAMER & KASLOW

3 DEPARTMENT: 308 HON. JANE L. JOHNSON

4 REPORTER: DANA SHELLEY, RPR, CSR #10177

5 LOS ANGELES, CALIFORNIA WEDNESDAY, OCTOBER 19, 2011

6 TIME: 1:52 P.M.

7 APPEARANCES: (AS HERETOFORE NOTED.)

8

9 THE COURT: GOOD AFTERNOON.

10 ALL RIGHT. WE HAVE TWO SEPARATE AND

11 INDEPENDENT MATTERS GOING TODAY. I'M GOING TO CALL BOTH

12 OF THEM AND HAVE THE ATTORNEYS ANNOUNCE THEIR PRESENCE.

13 OKAY. CALLING PEOPLE OF THE STATE OF

14 CALIFORNIA VS. THE LAW OFFICES OF KRAMER & KRAMER (SIC),

15 ET AL., AND IN RE THE ASSUMPTION OF JURISDICTION OVER

16 THE LAW PRACTICE OF MITCHELL J. STEIN.

17 PLEASE STATE YOUR APPEARANCES FOR THE

18 RECORD.

19 MR. TOMA: GOOD MORNING, YOUR HONOR. JAMES TOMA

20 ON BEHALF OF THE PEOPLE.

21 MS. CHAROENPONG: GOOD MORNING, YOUR HONOR -- GOOD

22 AFTERNOON, YOUR HONOR. TINA CHAROENPONG ON BEHALF OF

23 THE PEOPLE.

24 MS. LEECE: BLITHE LEECE FOR THE STATE BAR OF

25 CALIFORNIA.

26 MR. BENJAMIN: GOOD AFTERNOON, YOUR HONOR. DANIEL

27 BENJAMIN FOR THE RECEIVER.

28 THE COURT: OKAY.

2

1 MR. STEIN: GOOD AFTERNOON, YOUR HONOR. MITCHELL

2 STEIN, IN PROPRIA PERSONA; AND TO THE EXTENT RELEVANT,

3 FOR MITCHELL J. STEIN & ASSOCIATES, LLP.

4 MR. DAVIS: GOOD AFTERNOON, YOUR HONOR. ERIKSON

5 DAVIS FOR DEFENDANT AND RESPONDENT MITCHELL J. STEIN.

6 THE COURT: OKAY. ANYONE ELSE APPEARING?

7 NO? OKAY.

8 (DISCUSSION HELD OFF THE RECORD BETWEEN

9 THE COURT AND CLERK.)

10 THE COURT: ALL RIGHT. I'LL TALK A LITTLE LOUDER.

11 SO I THINK WE NEED TO TAKE THIS IN A LOGICAL

12 ORDER.

13 YOU MAY SIT DOWN.

14 (PAUSE IN PROCEEDINGS.)

15 THE COURT: MY THOUGHT WAS THAT WE SHOULD TAKE THE

16 OSC RE PRELIMINARY INJUNCTION IN THE PEOPLE OF THE STATE

17 OF CALIFORNIA VS. THE LAW OFFICES OF KRAMER & KRAMER

18 FIRST -- KRAMER & KASLOW FIRST. DOES THAT SEEM TO MAKE

19 SENSE?

20 AND THEN MOVE ON TO THE OSC RE ASSUMPTION OF

21 JURISDICTION OVER THE LAW PRACTICE OF MITCHELL STEIN

22 SECOND. AND THEN LASTLY, WE CAN GO TO THE EX PARTE THAT

23 WAS INCLUDED IN MR. STEIN'S OMNIBUS OPPOSITION. AND

24 THEN, I GUESS, LATER WE HAVE SOMETHING TO DO WITH THE

25 RECEIVER. THAT WAS A CONTINUED HEARING.

26 AND THE ATTORNEY THAT WILL BE REPRESENTING

27 MR. KRAMER IS GOING TO BE A LITTLE LATE, SO WE CAN TAKE

28 THAT LAST.

3

1 OKAY. NOW, MY FIRST QUESTION IS, HAVE YOU

2 HAD AN OPPORTUNITY TO READ THE TENTATIVE?

3 MR. TOMA: YES, YOUR HONOR.

4 THE COURT: AND WE'RE TALKING NOW ABOUT THE OSC RE

5 PRELIMINARY INJUNCTION.

6 MR. STEIN: REGARDING KRAMER OR REGARDING -- IN

7 THE ORDER --

8 THE COURT: NO, NO, NO. KRAMER IS A WHOLE 'NOTHER

9 THING.

10 MR. STEIN: OH, OKAY.

11 THE COURT: WE'RE GOING TO BE VERY BUSY, MR.

12 STEIN.

13 MR. STEIN: GOOD.

14 THE COURT: AND SO MY QUESTION IS, HAVE YOU READ

15 THE TENTATIVE IN THE OSC RE PRELIMINARY INJUNCTION?

16 MR. STEIN: I WAS JUST GIVEN THAT. I THOUGHT

17 THERE WERE TWO TENTATIVES -- AND THIS IS MUCH LONGER. I

18 HAVE NOT COMPLETELY READ IT; BUT BECAUSE OF THE OVERLAP,

19 YOUR HONOR, WITH THE ASSUMPTION ISSUES, I THINK WE CAN

20 ADDRESS IT.

21 BUT I HAVE NOT COMPLETELY READ EVERY

22 SENTENCE OF IT BECAUSE IT'S JUST TOO LONG. I WAS HANDED

23 IT FIVE MINUTES AGO.

24 THE COURT: ABOUT A HALF HOUR AGO, IT WAS ON THE

25 TABLE. THAT'S WHY I CAME OUT HERE, TO SEE IF EVERYBODY

26 HAD A COPY OF THE TENTATIVE.

27 MR. STEIN: AND I WAS JUST GIVEN IT FIVE MINUTES

28 AGO. BUT I'M WILLING TO PROCEED.

4

1 THE COURT: ALL RIGHT. I ASSUME THAT THE PEOPLE

2 SUBMIT ON THE TENTATIVE.

3 MR. TOMA: YES, YOUR HONOR.

4 THE COURT: OKAY.

5 MR. STEIN: YOUR HONOR, THE WAY THAT WE HAD

6 PLANNED TO ARGUE THIS --

7 IF I MAY STAND, GIVEN THAT I'M ADDRESSING?

8 THANK YOU, YOUR HONOR.

9 THE WAY THAT WE HAD PLANNED TO ADDRESS THIS

10 WAS THAT I WAS GOING TO ADDRESS MATTERS REGARDING THE

11 ASSUMPTION -- GIVEN THAT THERE'S THREE OSC'S; MR. DAVIS

12 WAS GOING TO ADDRESS MATTERS REGARDING THE PRELIMINARY

13 INJUNCTION.

14 GIVEN THAT THE PRELIMINARY INJUNCTION IS

15 SOME 15 PAGES LONGER THAN THE OTHER TWO TENTATIVES, I

16 WOULD RESPECTFULLY REQUEST THAT BOTH MYSELF AND MR.

17 DAVIS BE ENTITLED TO ADDRESS THE ISSUES IN THE

18 PRELIMINARY INJUNCTION, IF THAT PLEASES THE COURT.

19 THE COURT: WELL, I MEAN, IT SEEMS TO ME THAT -- I

20 MEAN, YOU CHOSE TO FILE AN OMNIBUS OPPOSITION; RIGHT?

21 MR. STEIN: WE DID, BUT THERE ARE THREE OSC'S.

22 BUT THAT'S CORRECT, YOUR HONOR, WE DID.

23 THE COURT: OKAY. AND -- THREE OSC'S?

24 MR. STEIN: I BELIEVE THERE ARE TWO OR THREE

25 OSC'S. THERE'S ONE OSC FOR THE ASSUMPTION OF

26 JURISDICTION OVER THE LAW FIRM, THERE'S ONE OSC RE

27 PRELIMINARY INJUNCTION, AND THERE'S ONE OSC RE THE

28 FREEZING OF ASSETS. SO THERE ARE THREE OSC'S THAT I

5

1 BELIEVE I'M RESPONDING TO.

2 MR. TOMA: IF I MAY CLARIFY, YOUR HONOR.

3 THERE IS AN OSC REGARDING THE PRELIMINARY

4 INJUNCTION AND ASSET FREEZE ORDER. THAT'S PART OF THE

5 SAME ORDER.

6 THE COURT: ALL RIGHT.

7 MR. TOMA: THERE IS ALSO AN OSC REGARDING

8 CONFIRMATION OF APPOINTMENT OF THE RECEIVER. I JUST

9 WANTED TO DRAW THAT TO THE COURT'S ATTENTION. BOTH OF

10 THOSE PROPOSED ORDERS WERE LODGED WITH THE COURT AND

11 SERVED UPON DEFENDANTS.

12 AND THEN THE STATE BAR HAS THEIR OWN OSC.

13 THE COURT: OKAY. ALL RIGHT.

14 WELL, DID YOU WANT TO TAKE IT IN A DIFFERENT

15 ORDER?

16 MR. STEIN: NO. OF COURSE, I WOULD TAKE IT IN THE

17 ORDER THE COURT WISHED. WHAT I WOULD RESPECTFULLY

18 REQUEST IS THAT I MAKE CERTAIN OF THE ARGUMENTS

19 REGARDING THE PRELIMINARY INJUNCTION AND THAT MR. DAVIS

20 MAKE HIS ARGUMENTS, AND THEN WE MOVE TO THE ISSUE OF

21 FREEZING ACCOUNTS.

22 AND WHEN WE MOVE TO THE ISSUE OF THE

23 ASSUMPTION OF JURISDICTION, I WILL BE THE SOLE PERSON

24 ADDRESSING THOSE TWO ISSUES.

25 THE COURT: ALL RIGHT.

26 MR. STEIN: THANK YOU, YOUR HONOR.

27 YOUR HONOR, I HAVE WITH ME, THAT PERTAIN TO

28 THE PRELIMINARY INJUNCTION, SOME DEMONSTRATIVE EXHIBITS

6

1 WHICH I HAVE EIGHT-BY-TENS OF. I'D LIKE TO SUBMIT THESE

2 TO THE COURT SO IT CAN READ ALONG WHILE I SHOW THE COURT

3 THE BLOWUPS. I'VE PROVIDED THEM TO COUNSEL.

4 IS THAT ACCEPTABLE?

5 THE COURT: WELL, FIRST, YOU HAVE TO TELL ME WHAT

6 THEY ARE. AND THEN I HAVE TO FIND OUT WHETHER OR NOT

7 THE MOVING PARTIES OBJECT.

8 MR. STEIN: OKAY. ONE OF THEM IS AN EMAIL FROM

9 THE STATE BAR, DATED OCTOBER 12, TO A CLIENT THAT THE

10 STATE BAR HAS OVER 2,000 CLIENT FILES, WHICH IS CONTRARY

11 TO THE STATE BAR'S REPRESENTATION TO THE COURT AT THE

12 SEPTEMBER 29TH HEARING AND AT THE SEPTEMBER 19TH

13 HEARING.

14 THE SECOND IS SOMETHING THAT I REFERRED TO

15 IN MY DECLARATION, REGARDING THE WEBSITE OF MITCHELL J.

16 STEIN & ASSOCIATES AND HOW CLIENTS COME TO THE FIRM,

17 WHICH IS SIMPLY SOMETHING THAT COMES OFF THE WEBSITE.

18 THE THIRD IS THE MAILER OF BROOKSTONE THAT

19 IS NOT BEING ENFORCED.

20 AND THE FOURTH IS THE CERTIFICATE OF LLP,

21 WHICH APPEARS TO BE EXTREMELY IMPORTANT.

22 AND THAT'S IT. IT'S THOSE FOUR EXHIBITS

23 THAT I WISH TO DISCUSS. AND I'LL BE DISCUSSING THEM.

24 IF I'M NOT ALLOWED TO SHOW THEM IN A BLOWUP, THAT'S

25 FINE. IF THE COURT IS DISINTERESTED IN THEM, I'LL JUST

26 BE MAKING A RECORD.

27 THE COURT: NO, I'M NOT DISINTERESTED IN THEM.

28 BUT YOU HAD AN OPPORTUNITY TO FILE AN OPPOSITION. I'M

7

1 WONDERING WHY IT WASN'T INCLUDED.

2 MR. STEIN: WELL, YOUR HONOR, THE EXHIBIT

3 REGARDING THE 2,000 CLIENT FILES IS DATED OCTOBER 12.

4 THAT WAS SIX DAYS AFTER WE FILED OUR OPPOSITION. SO IT

5 WAS PHYSIOLOGICALLY AND HUMANLY IMPOSSIBLE TO SUBMIT

6 THAT TO THE COURT AT THAT TIME.

7 THE CUSTOM FORM SUBMISSION FROM MY WEBSITE,

8 WHICH SHOWS WHERE THE CLIENTS COME FROM, WAS DISCUSSED

9 IN MY PAPERS, AND I INDICATED THAT I WOULD BE BRINGING

10 THAT TO COURT.

11 AND THE UNLAWFUL MAILER FROM BROOKSTONE,

12 WHICH THE ATTORNEY GENERAL HAS DONE NOTHING ABOUT, WAS

13 ATTACHED AS EXHIBIT 2 TO THE EX PARTE APPLICATION

14 SUBMITTED TO THE COURT ON SEPTEMBER 19TH. AND SO I'M

15 JUST RE-REFERRING TO THAT, BUT I WOULD LIKE IT BLOWN UP

16 BECAUSE I THINK IT'S IMPORTANT.

17 AND SO ALL THESE WERE EITHER DISCLOSED TO

18 THE COURT -- AND THEN THE LLP IS -- WE'VE TALKED ABOUT

19 IT A MILLION TIMES, AND THAT'S EXHIBIT 1.

20 THE COURT: BUT WHAT I REALLY WANT YOU TO ADDRESS

21 IS YOUR POSITION THAT YOU DIDN'T KNOW THESE OTHER PEOPLE

22 AND THAT YOU WERE NOT INVOLVED. THAT IS WHAT I AM MOST

23 INTERESTED IN.

24 MR. STEIN: I'LL BE ADDRESSING THAT, AS WELL, IN

25 DETAIL; BUT THERE ARE -- THERE ARE CERTAIN THINGS THAT

26 ARE INTERTWINED WITH THOSE. AND I HAVE SPECIFIC

27 EVIDENTIARY PIECES FROM THE PAPERS SUBMITTED BY THE

28 PEOPLE REGARDING THOSE EXHIBITS THAT DIRECTLY ADDRESS

8

1 SOME OF THE COURT'S EVIDENTIARY CONCERNS.

2 BUT THERE ARE SOME PROCEDURAL ISSUES, AS

3 WELL, THAT I'D LIKE IT ADDRESS IN MY PRESENTATION ON THE

4 PRELIMINARY INJUNCTION -- NOT THE ASSUMPTION, NOT THE

5 FREEZING; WILL PROBABLY BE LESS THAN 20 MINUTES.

6 BUT I DO THINK THOSE EXHIBITS ARE IMPORTANT,

7 BUT I DO INTEND TO TALK ABOUT SPECIFIC EXHIBITS AND

8 SPECIFIC EVIDENCE.

9 THE COURT: OKAY -- DO.

10 MS. LEECE: YOUR HONOR, BLITHE LEECE FOR THE STATE

11 BAR.

12 WE'RE GOING TO OBJECT TO THIS EMAIL ON THE

13 BASIS OF HEARSAY. FIRST OF ALL, WE DON'T KNOW WHO THE

14 PERSON IS THAT SUPPOSEDLY SENT IT FROM THE STATE BAR.

15 THERE'S ABSOLUTELY NO CONTEXT IN TERMS OF THE MESSAGE

16 THAT WAS SENT TO THE STATE BAR AS TO WHAT QUESTION WAS

17 ASKED. AND WE DON'T KNOW --

18 BOTH OF THESE STATEMENTS ARE COMING IN FOR

19 THE TRUTH OF THE MATTER ASSERTED. IT'S CLEARLY HEARSAY.

20 WE'RE OBJECTING ON THAT BASIS.

21 MR. STEIN: YOUR HONOR, THEY -- I AM NOT

22 SUBMITTING THEM FOR THE PROOF OF THE MATTER ASSERTED.

23 IF THE STATE BAR SUBMITS THAT THE EMAIL THAT SAYS THERE

24 ARE 2,000 CLIENT FILES THAT THE STATE BAR IS HOLDING IS

25 NOT AUTHENTIC, AND THEY'RE WILLING TO SIGN A DECLARATION

26 UNDER PENALTY OF PERJURY BASED ON THAT REPRESENTATION, I

27 WON'T ADDRESS IT.

28 THE COURT: WELL, WAIT A MINUTE.

9

1 MR. STEIN: THEY CAN'T PLAY HOT AND COLD, YOUR

2 HONOR. I'M JUST MAKING A RECORD.

3 THE COURT: YOU KNOW, DON'T INTERRUPT ME. JUST A

4 MINUTE.

5 MR. STEIN: I'M SORRY, YOUR HONOR.

6 THE COURT: JUST A MINUTE.

7 YOU'RE ATTEMPTING TO ADMIT INTO EVIDENCE --

8 AND I DON'T KNOW WHAT YOU WOULD DO IT FOR OTHER THAN THE

9 TRUTH OF THE MATTER ASSERTED -- A PIECE OF PAPER THAT

10 PURPORTS TO BE AN EMAIL FROM THE STATE BAR. THE STATE

11 BAR?

12 MS. LEECE: YES.

13 THE COURT: THE STATE BAR. I'M GOING TO SUSTAIN

14 THE OBJECTION.

15 MR. STEIN: YOUR HONOR, WE'RE OFFICERS OF THE

16 COURT. THE STATE BAR STATED TO THIS COURT, AS WELL AS

17 TO JUDGE ELIAS, THAT THEY HAD 240 FILES. I'M --

18 THE COURT: OKAY. THAT'S FINE. BUT I AM NOT

19 GOING TO TAKE THIS AS EVIDENCE THAT DISPUTES WHATEVER

20 REPRESENTATION WAS MADE BY THE STATE BAR BECAUSE I HAVE

21 TO HAVE AUTHENTICATED EVIDENCE.

22 NOW, I AM GOING TO SUSTAIN THE OBJECTION.

23 MOVE ON.

24 MR. STEIN: WELL, AND I'VE MADE THE RECORD --

25 THE COURT: YES, YOU HAVE.

26 MR. STEIN: -- THAT THERE'S 2,000 FILES. AND THE

27 STATE BAR HAS THE CAPACITY TO TELL THE COURT WHETHER OR

28 NOT --

10

1 THE COURT: NO. YOU'VE MADE THE RECORD THAT YOU

2 HOLD A PIECE PAPER THAT IS NOT ADMISSIBLE THAT THE STATE

3 BAR HAS --

4 MR. STEIN: AND I'D LIKE AN OFFICER OF THE COURT

5 TO TELL US WHETHER IT'S TRUE OR NOT.

6 THE COURT: WELL, I DON'T KNOW IF ANYBODY SITTING

7 HERE COULD POSSIBLY DO THAT NOW.

8 MR. STEIN: OKAY.

9 THE COURT: NOW, MR. STEIN, WE DON'T HAVE ALL

10 AFTERNOON. I'VE MADE A RULING. YOU'VE MADE YOUR

11 RECORD. MOVE ON.

12 MR. STEIN: OKAY.

13 THE COURT: THANK YOU.

14 MR. STEIN: I'LL MOVE ON.

15 THE COURT: THANK YOU.

16 MR. STEIN: I HAVE THAT PIECE OF EVIDENCE WITH ME.

17 ARE THERE ANY OTHER OBJECTIONS TO THE OTHER

18 THREE EXHIBITS?

19 THE COURT: DO YOU HAVE ANYTHING ELSE?

20 MR. TOMA: YES, YOUR HONOR. WE WOULD OBJECT TO

21 THE FOLLOWING EXHIBITS. I DON'T BELIEVE WE'VE SEEN THIS

22 SECOND EXHIBIT, WHICH IS TITLED "SUBJECT: RE CUSTOM

23 FORM SUBMISSION." IT SEEMS TO BE OFFERED FOR THE TRUTH

24 OF THE MATTER ASSERTED. THERE'S NO NAMES ASSOCIATED

25 WITH IT.

26 WE OBJECT ON LACK OF FOUNDATION, HEARSAY.

27 MR. STEIN: YOUR HONOR, I SPECIFICALLY

28 AUTHENTICATED THESE DOCUMENTS IN MY DECLARATION. THE

11

1 NAMES HAVE BEEN REDACTED BECAUSE THEY'RE PRIVATE. THESE

2 PEOPLE ARE ENTITLED TO RIGHTS OF PRIVACY.

3 THE COURT: YEAH, BUT ARE THEY ATTACHED? ARE

4 THESE ATTACHED?

5 MR. STEIN: NO. I REFERENCED THEM AND SAID I

6 WOULD BRING AS MANY AS I HAD TO THE COURT WITH ME. AND

7 I'M HERE. I'M AN OFFICER OF THE COURT. I REPRESENT

8 THESE COME FROM MY WEBSITE.

9 I'VE MADE THE RECORD. SO IF THE COURT WANTS

10 TO SUSTAIN THAT OBJECTION, I'VE MADE THAT RECORD, AS

11 WELL, AND I'LL PUT THAT ONE DOWN.

12 THE COURT: OKAY.

13 MR. STEIN: I'LL MAKE IT EASY. AS LONG AS I MAKE

14 THE RECORD, I'M HAPPY.

15 THE COURT: THAT'S FINE.

16 MR. STEIN: AND I APPRECIATE THE COURT'S

17 INDULGENCE IN THAT REGARD.

18 THE COURT: THAT'S FINE.

19 MR. STEIN: THE THIRD EXHIBIT IS WHAT AN UNLAWFUL

20 MAILER REALLY LOOKS LIKE. THIS WAS ATTACHED TO MY

21 DECLARATION. IT WAS AUTHENTICATED BEFORE. IT WAS

22 ATTACHED TWICE: IT WAS ATTACHED TO THE EX PARTE AND

23 ATTACHED TO THE OMNIBUS, AS THE COURT INDICATED.

24 AND I'D LIKE TO REFER TO THAT, AS WELL,

25 BECAUSE COMPLAINTS, INCLUDING MINE, HAVE BEEN MADE TO

26 THE ATTORNEY GENERAL'S OFFICE REGARDING THESE ILLEGAL

27 MAILERS THAT ARE ACTUALLY OCCURRING.

28 THERE'S A DECLARATION OF MR. --

12

1 THE COURT: IS THIS THE BROOKSTONE?

2 MR. STEIN: YES.

3 THE COURT: OKAY.

4 MR. STEIN: YES. THANK YOU, YOUR HONOR.

5 THE COURT: I JUST WANT TO MAKE SURE THAT WE'RE ON

6 THE SAME PAGE.

7 MR. STEIN: YOU'RE ABSOLUTELY CORRECT.

8 THE COURT: OKAY.

9 MR. STEIN: THAT IS APPROXIMATELY A ONE-MINUTE

10 PRESENTATION. I JUST WANT TO OUTLINE ONE THING ON IT.

11 THAT'S THE ONLY OTHER ONE THAT I HAVE, GIVEN THAT THE

12 COURT SUSTAINED THE OBJECTIONS TO THE --

13 AND THEN THE LLP I THINK I SHOULD BE ABLE TO

14 TALK ABOUT. SINCE THE COURT'S CLAIMING IT DOESN'T EXIST

15 OR IT HASN'T BEEN AUTHENTICATED, I'D LIKE TO --

16 THE COURT: I'M NOT CLAIMING ANYTHING. I'M JUST

17 SAYING YOU DIDN'T --

18 MR. STEIN: THE COURT HAS RULED THAT -- OR

19 TENTATIVELY RULED THAT IT DOESN'T EXIST.

20 AND THAT'S THE LAST ONE. AND I'VE ALREADY

21 ATTACHED THAT AS EXHIBIT 1 TO MY DECLARATION ON

22 SEPTEMBER 19. THAT'S IT. THERE'S NO OTHER

23 DEMONSTRATIVE EXHIBITS.

24 THE COURT: OKAY. NOW, WITH RESPECT TO -- HAVE

25 THE MOVING PAPERS SEEN THIS EVIDENCE WITH RESPECT TO THE

26 LLP?

27 MS. LEECE: IS THIS WHAT YOU JUST HANDED ME?

28 MR. STEIN: IT'S EXHIBIT 1 TO MY EX PARTE

13

1 APPLICATION, FILED ON SEPTEMBER 19.

2 THE COURT: OH, THE CERTIFICATE?

3 MR. STEIN: CORRECT. THAT'S ALL IT IS.

4 THE COURT: OKAY. WELL, I'VE ALREADY -- IT'S

5 UNAUTHENTICATED. IT'S UNAUTHENTICATED, AND IT'S PURE

6 HEARSAY. I THINK I ALREADY INDICATED THAT IN MY RULING.

7 MR. STEIN: YEAH. AND ALL I WISH TO DO IS TO MAKE

8 A RECORD REGARDING THAT RULING. I DISAGREE WITH THAT

9 RULING, RESPECTFULLY.

10 THE COURT: OKAY.

11 MR. STEIN: AND I'D LIKE TO -- I THINK A RECORD

12 THAT THE COURT CAN PULL UP ON ITS COMPUTER IS AUTHENTIC;

13 BUT IF THE COURT IS GOING TO RULE THAT IT'S HEARSAY, AT

14 LEAST I'VE MADE MY RECORD. SO THAT'S THE ONLY THING I

15 INTEND TO DO.

16 THE COURT: I THINK YOU HAD TO SUBMIT A CERTIFIED

17 COPY.

18 BUT I GUESS, WITH RESPECT TO THE LLP, I

19 REALLY WOULD LIKE YOU TO ADDRESS THE FACT THAT THERE'S

20 NO RECORD WITH THE DEPARTMENT OF CORPORATIONS AND THE

21 SECRETARY OF STATE SITE. WHEN DID YOU FORM THIS LLP?

22 MR. STEIN: I WOULD LIKE TO ADDRESS THAT BY

23 REFERRING TO THE EXHIBIT; BUT THE APPLICATION WAS FILED

24 IN MARCH, AND THE APPROVAL --

25 THE COURT: TO WHOM?

26 MR. STEIN: TO THE CALIFORNIA SECRETARY OF STATE.

27 IT WAS FILED BY OUTSIDE COUNSEL FOR THE LLP. AND

28 APPROVAL WAS RENDERED BY THE SECRETARY OF STATE IN APRIL

14

1 AND BY THE STATE BAR ON MAY 2. AND I UNDERSTAND AND

2 RESPECT, IF THE COURT WISHES TO SUSTAIN A HEARSAY

3 OBJECTION TO EVERYTHING I'M SAYING, BUT I STILL WOULD

4 LIKE TO MAKE THE RECORD.

5 THE COURT: OKAY. BUT DIDN'T YOU HAVE TO BE

6 REGISTERED AS AN LLP WITH THE SECRETARY OF STATE?

7 MR. STEIN: AND WE WERE. AND THE ANSWER --

8 THE COURT: WELL, WHERE ARE THOSE DOCUMENTS?

9 MR. STEIN: WHAT'S THAT?

10 THE COURT: WHERE ARE THOSE DOCUMENTS?

11 MR. STEIN: THE FACE OF THE LLP DOCUMENT SAYS:

12 "THE STATE BAR FINDING THAT THE

13 REQUIREMENTS OF THE FORMATION OF AN LLP BEING

14 SATISFIED, HEREBY ISSUES THE FOLLOWING

15 CERTIFICATE."

16 THE COURT: THAT HAS NOTHING TO DO WITH THE

17 CORPORATIONS CODE REQUIREMENTS WITH RESPECT TO THE

18 FORMATION. WHERE ARE THOSE DOCUMENTS?

19 MR. STEIN: THOSE DOCUMENTS ARE ON LINE. BUT THE

20 STATE BAR HAS NEVER OBJECTED OR EVEN STATED --

21 THE COURT: THEY'RE NOT --

22 MR. STEIN: -- THAT THE LLP DOESN'T EXIST.

23 THE COURT: THEY ARE NOT ON LINE. OKAY? THEY ARE

24 NOT ON LINE.

25 MR. STEIN: WELL, IF THAT'S THE COURT'S STATEMENT,

26 AND I'M SITTING HERE WITH A CERTIFICATE FROM THE STATE

27 BAR, I PRESUME A TRIER OF LAW OR TRIER OF FACT CAN

28 DETERMINE WHO IS RIGHT; BUT I WOULD LIKE TO MAKE THE

15

1 ARGUMENT AND MAKE THE PROOF.

2 I RESPECT THE COURT'S RULING. I RESPECT THE

3 COURT'S THOUGHTS ON THE MATTER. I JUST WANT MY THOUGHTS

4 TO BE ON THE RECORD, AS WELL.

5 THE COURT: OKAY. WELL, COULD YOU TELL ME, WHO

6 WAS YOUR OTHER PARTNER?

7 MR. STEIN: THE PARTNERS OF THE LLP, AS I'VE

8 INDICATED AT THE BEGINNING -- WHEN THE APPLICATION WAS

9 FIRST FILED, THE PARTNERS, IN AN APPLICATION TO THE

10 SECRETARY OF STATE AND THE STATE BAR, WERE MICHAEL

11 RILEY, MITCHELL STEIN, AND ERIKSON DAVIS, AT THE

12 BEGINNING.

13 ERIKSON DAVIS -- HIS PARTNERSHIP WAS

14 TERMINABLE AT WILL; I'VE TESTIFIED TO THAT. AND THE LLP

15 WAS APPROVED, AND THOSE ARE THE PARTNERS. THERE WAS A

16 PARTNERSHIP OFFER MADE TO A SUBSEQUENT LOS ANGELES

17 LAWYER THREE DAYS BEFORE THE RAID OCCURRED, AND

18 OBVIOUSLY, THAT CHILLED ANY PARTNERSHIP DISCUSSIONS WITH

19 THAT INDIVIDUAL.

20 ACTUALLY, IT DIDN'T CHILL THEM, BUT IT

21 DELAYED THEM.

22 THE COURT: ALL RIGHT. SO IT WAS ORIGINALLY

23 ERIKSON DAVIS, MR. RILEY, AND YOU?

24 MR. STEIN: THAT'S CORRECT.

25 AND THE STATE BAR ISSUED A CERTIFICATE. AND

26 THIS IS VERY IMPORTANT TO THE FREEZE ORDERS THAT I THINK

27 THE COURT HAS VERY THOUGHTFULLY ADDRESSED IN ITS

28 TENTATIVE BECAUSE YESTERDAY THERE WAS A HEARING IN THE

16

1 UNITED STATES BANKRUPTCY COURT IN FLORIDA.

2 AND WE HAD SOME EMAILS LAST NIGHT REGARDING

3 THE HEARING. THERE'S A DISPUTE ABOUT WHAT HAPPENED AT

4 THE HEARING. THAT'S OF NO MOMENT. BUT THE RECEIVER

5 WANTS A CHANCE TO STUDY THE WRITTEN ORDER, I BELIEVE, OF

6 THE --

7 BY THE WAY, THE CALIFORNIA ATTORNEY GENERAL

8 WAS PRESENT -- NOT HERSELF, BUT AN OFFICER OF THE OFFICE

9 WAS PRESENT -- IN FLORIDA YESTERDAY. SO THIS WASN'T A

10 TELEPHONE THING. THIS WAS A -- THEY FLEW TO FLORIDA.

11 AND THE COURT RULED THAT PRIOR TO HIM

12 APPROVING ANY FREEZE ORDER, NONE OF MY PERSONAL

13 ACCOUNTS, NONE OF MY DEBTOR-IN-POSSESSION ACCOUNTS, CAN

14 BE FROZEN.

15 I UNDERSTAND THAT THE ATTORNEY GENERAL'S

16 OFFICE DOESN'T THINK THAT'S WHAT HAPPENED. AND I'M

17 TELLING -- I'M REPRESENTING TO THE COURT THAT IS WHAT

18 HAPPENED. AND THE HEARING WAS YESTERDAY.

19 AND THE FREEZE ORDER -- THE COURT HAD

20 INDICATED ON ITS TENTATIVE, I THINK, WITH REGARD TO ONE

21 OF THE EX PARTES THAT THE RECEIVER SAID HE NEVER TOOK

22 ANY OF MY PERSONAL ACCOUNTS.

23 THE COURT: WELL, WE'LL GET THERE.

24 MR. STEIN: AND SO THAT'S WHY I WANTED TO GO INTO

25 THE LLP, BECAUSE EVEN -- BECAUSE NOTWITHSTANDING

26 WHATEVER ORDERS THERE ARE REGARDING THE LLP, THERE ARE

27 FIVE LLP BANK ACCOUNTS THAT THE STATE BAR HAS FROZEN.

28 AND THE LLP REPRESENTS CLIENTS.

17

1 AND THE BANK THOUGHT THERE WAS ENOUGH

2 EVIDENCE THAT THERE WAS AN LLP. THE STATE BAR THOUGHT

3 THERE WAS ENOUGH EVIDENCE THERE WAS AN LLP. THERE WAS

4 NEVER ANY QUESTION. AND THOSE ACCOUNTS HAVE BEEN

5 FROZEN. SO IF IT DOESN'T EXIST, THEN THEY SHOULD HAVE

6 NO PROBLEM UNFREEZING THE ACCOUNTS. THERE'S NO MONEY IN

7 THEM, BUT THE LLP CAN'T OPERATE. IT CAN'T DO BUSINESS.

8 AND THAT -- SOME OF THE -- THE INJUNCTION,

9 YOUR HONOR, JUST ADDRESSES THINGS THAT I'M NOT SUPPOSED

10 TO DO THAT I CLAIM I NEVER DID. AND I'LL GO INTO THE

11 EVIDENCE REGARDING THAT. SO THAT'S WHY I KEEP

12 GRAVITATING OVER TO CURRENT OPERATIONS.

13 THE PEOPLE ARE IN THIS COURTROOM TODAY

14 BECAUSE THEIR HOUSES ARE UNDER ATTACK. IT'S NOT

15 RELEVANT, AS THE COURT HAS INDICATED, WHETHER THEY'RE

16 RIGHT OR WRONG OR THEIR LAWSUITS ARE RIGHT OR WRONG, BUT

17 THEY'RE HERE FOR THIS REASON.

18 THE LLP REPRESENTS THEM, AND THE LLP WOULD

19 LIKE TO DO BUSINESS. AND IF THE -- AND THE STATE HAS

20 SAID IN ITS PAPERS THAT THEY DON'T CARE WHAT LLP

21 MITCHELL J. STEIN WORKS FOR. THEY JUST WANT TO TAKE

22 OVER THE PRACTICE OF MITCHELL J. STEIN. AND I'LL BE

23 ADDRESSING WHETHER THAT'S PROPER OR NOT.

24 BUT THESE PEOPLE ARE REPRESENTED BY AN LLP,

25 AND MITCHELL J. STEIN IS A PARTNER OF THE LLP. AND THE

26 STATE BAR HAS NO PROBLEM WITH -- AND SPECIFICALLY, IN

27 THEIR BRIEF, AS THE COURT READ, THEY HAVE NO PROBLEM

28 WITH ME PRACTICING LAW IN BEHALF OF AN LLP.

18

1 SO THESE CLIENTS ARE HERE --

2 THE COURT: I DON'T THINK THAT'S WHAT THEY'RE

3 SAYING.

4 MR. STEIN: WELL, I CAN READ --

5 THE COURT: YOU DON'T SUDDENLY -- YOU ARE NOT AN

6 LLP. YOU ARE AN ATTORNEY, INDIVIDUALLY, FIRST. ALL

7 RIGHT? WHAT THEY ARE SEEKING TO DO IS HAVE YOU -- TO

8 ASSUME YOUR PRACTICE.

9 MR. STEIN: I DON'T HAVE A PRACTICE, YOUR HONOR,

10 SO -- YOU KNOW, WE CAN GO INTO 6180.14, WHICH

11 SPECIFICALLY SAYS THAT A LAW PRACTICE IS DEFINED, IF IT

12 IS A PARTNERSHIP, AS A SITUATION WHERE ALL THE PARTNERS

13 ARE INCOMPETENT.

14 I DON'T HAVE A LAW PRACTICE. I TRANSFERRED

15 EVERY ASSET TO THE LLP, IN ACCORDANCE WITH A BANKRUPTCY

16 PLAN OF REORGANIZATION APPROVED BY THE UNITED STATES

17 BANKRUPTCY COURT IN JANUARY -- THE END OF JANUARY.

18 I DON'T HAVE A LAW PRACTICE. I HAD ONE

19 BEFORE. I'M WILLING TO ADDRESS -- AND THE ISSUES OF

20 WRONGDOING BEFORE --

21 AND THE EXAMPLE THAT THE STATE BAR GIVES IS,

22 IF PAUL HASTINGS -- I THINK THE COURT REMEMBERS. IF

23 PAUL HASTINGS HAD A PARTNER THAT WAS ILLEGALLY

24 MARKETING, THEY COULD GO IN TO PAUL HASTINGS, AFTER

25 GOING INTO COURT -- THEY WOULD GET A COURT ORDER; THEY

26 COULD GO IN AND TAKE ALL THE FILES THAT THEY BELIEVED

27 THAT LAWYER HAD.

28 AND YOUR HONOR, RESPECTFULLY, THAT IS THE

19

1 WORST AND MOST PREPOSTEROUS ARGUMENT I'VE EVER HEARD.

2 CAN YOU IMAGINE WHAT PAUL HASTINGS WOULD DO IF THE STATE

3 BAR EVEN MADE AN APPLICATION TO GO INTO THEIR FILE ROOM

4 AND SEIZE ALL THEIR FILES AND CLOSE THEIR BANK ACCOUNTS,

5 BASED ON THE ACTIONS OF ONE PARTNER?

6 THE COURT: YEAH, I THINK I KNOW WHAT THEY WOULD

7 DO. SOMEBODY ELSE FROM PAUL HASTINGS, WHO THE STATE BAR

8 DID NOT SEEK TO ASSUME -- EXCUSE ME, DID NOT SEEK TO

9 ASSUME THE JURISDICTION OVER THAT INDIVIDUAL'S PRACTICE,

10 WOULD STEP IN AND TAKE OVER THOSE CASES.

11 MR. STEIN: AND THAT'S EXACTLY WHAT THIS LLP

12 WANTED TO DO.

13 THE COURT: NO, NO. YOU HAVE A FLORIDA -- YOU

14 HAVE A FLORIDA ATTORNEY, WHO IS NOT AUTHORIZED TO

15 PRACTICE IN CALIFORNIA. AND MR. ERIKSON DAVIS IS

16 OPERATING AS THE LAW OFFICES OF ERIKSON DAVIS AND NOT AS

17 A MEMBER OF YOUR LLP.

18 SO I THINK I SET THAT FORTH IN THE TENTATIVE

19 THERE.

20 MR. STEIN: YOUR HONOR, EXHIBIT 4 TO THE EX PARTE

21 APPLICATION ON THE 19TH WAS A DOCUMENT THIS COURT IS

22 REQUIRED TO TAKE JUDICIAL NOTICE OF, AND THAT IS THE

23 FOUR FILINGS MADE IN THIS COURTHOUSE BEFORE JUDGE

24 HIGHBERGER, IN WHICH MR. DAVIS SUBSTITUTED THE LLP IN

25 PLACE AND INSTEAD OF MITCHELL STEIN, THE INDIVIDUAL, AT

26 THE BEGINNING OF MAY AND SAID THAT HE WAS A MEMBER OF

27 THE LLP.

28 THOSE DOCUMENTS ARE IN THE COURT RECORD.

20

1 SO --

2 THE COURT: HEREIN LIES THE REAL PROBLEM, BECAUSE

3 YOU AND MR. DAVIDSON (SIC) KEEP TAKING DIFFERENT

4 POSITIONS. MR. DAVIDSON HAS FILED PAPERS IN THIS

5 COURTROOM UNDER THE LAW OFFICES OF ERIKSON DAVIS.

6 I HAVE NO EVIDENCE THAT AN LLP WAS FORMED IN

7 THIS STATE. I'VE SET FORTH EVERYTHING. WE'RE NOT GOING

8 TO TALK ABOUT IT ANYMORE, UNLESS YOU HAVE SOMETHING NEW

9 TO GIVE ME ON THAT ONE.

10 MR. STEIN: I HAVE NOTHING NEW TO GIVE YOU, OTHER

11 THAN, WHEN THE STATE BAR RAIDS AN LLP THAT THE COURT IS

12 NOW FINDING DOESN'T EXIST, MR. DAVIS, AS AN EMANCIPATED

13 HUMAN BEING -- SLAVERY HAVING BEEN ABOLISHED -- HAS THE

14 RIGHT TO GO DO BUSINESS UNDER -- AS LONG AS IT DOESN'T

15 BREACH THE LLP AGREEMENT, UNDER ANY FIRM HE WANTS. AND

16 HE WENT AND DID THAT, TO PROTECT THE CLIENTS.

17 I BELIEVE AN OFFICER OF THE COURT AND A

18 LAWYER HAS A DUTY TO PROTECT THE CLIENTS. SO THE FACT

19 THAT HE, AFTER THE RAID, SAID, "I'M NOW GOING TO DO WHAT

20 THE LLP CONTRACT SAYS AND OPERATE MYSELF, SO THE CLIENTS

21 HAVE CONTINUITY," I DON'T SEE HOW THAT WOULD POSSIBLY BE

22 CRITICIZED. IT'S NOT AN INCONSISTENT POSITION. THOSE

23 DOCUMENTS ARE SPECIFICALLY OF RECORD.

24 SO YOU KNOW, THE -- THAT'S MY RESPONSE TO

25 THE INCONSISTENT POSITION.

26 THE COURT: SO YOU CONFIRM THAT HE IS PRACTICING

27 AS AN INDIVIDUAL PRACTITIONER, SOLE PRACTITIONER?

28 MR. STEIN: AS OF TODAY, AS OF -- EXCUSE ME. AS

21

1 OF THE DATE OF THE RAID, TWO DAYS AFTERWARDS, YES, HE

2 WAS PRACTICING AS A SOLE PRACTITIONER. NOW --

3 THE COURT: OKAY. SO NOW LET ME JUST STOP YOU,

4 AND THEN WE CAN MOVE ON.

5 BECAUSE NOW YOU HAVE AN LLP THAT HAS -- IF

6 ONE EXISTS, AND I DON'T HAVE ANY EVIDENCE OF THAT, ANY

7 ADMISSIBLE EVIDENCE; AND IT'S NEVER BEEN ON ANY

8 LETTERHEAD I'VE SEEN.

9 BUT ANYWAY, IF THAT'S THE CASE, THEN WE HAVE

10 YOU, MR. STEIN, AND A FLORIDA LAWYER, WHO CANNOT

11 PRACTICE IN THE STATE OF CALIFORNIA. SO THERE'S NOBODY

12 IN YOUR FIRM THAT CAN STEP IN AND TAKE OVER THE CASES

13 FOR THE LLP.

14 NOW, THAT'S IT. LET'S MOVE ON TO THE NEXT

15 ISSUE, OR WE'LL BE HERE ALL DAY.

16 MR. STEIN: AND I -- AND THE RECORD IS, I DISAGREE

17 WITH THAT CHARACTERIZATION. BUT I RESPECT WHAT THE

18 COURT HAS SAID, AND I'LL MOVE ON.

19 THE COURT: YEAH. I REALLY WANT YOU TO ADDRESS

20 THE REAL ISSUE ABOUT YOUR POSITION THAT YOU WERE NOT

21 INVOLVED IN THIS, IN VIEW OF THE OVERWHELMING EVIDENCE

22 THAT YOU WERE.

23 MR. STEIN: WELL, YOUR HONOR, FIRST OF ALL,

24 IT'S -- THERE ARE NUMEROUS THINGS THAT ARE UNDISPUTED BY

25 THE STATE, AND THEY ALL PERTAIN TO EVIDENCE. AND I'M

26 GOING TO BE REFERRING TO VARIOUS PIECES OF EVIDENCE.

27 THEY DON'T DISPUTE THAT I'VE NEVER MET OR

28 SPOKEN WITH 24 OF THE OTHER DEFENDANTS THAT WERE

22

1 INVOLVED IN THIS ENTERPRISE. THEY DON'T DISPUTE IT. I

2 HAVEN'T. THEY SAY THAT I SPOKE --

3 THE COURT: WHO HAVE YOU NOT SPOKEN TO?

4 MR. STEIN: IF I WERE TO GO THROUGH A FULL CAPTION

5 PAGE OF THE COMPLAINT -- I'VE ALREADY LISTED IT, BUT --

6 (LOCATES DOCUMENT.)

7 MR. TOMA: YOUR HONOR, IF I COULD JUST MAKE ONE

8 POINT OF --

9 MR. STEIN: I HAVE IT.

10 MR. TOMA: -- ONE POINT OF CLARIFICATION.

11 I DON'T UNDERSTAND THAT THERE ARE 24

12 DEFENDANTS IN THIS CASE. OUR COUNT HAS ALWAYS BEEN 21.

13 AND MY UNDERSTANDING FROM THE OPPOSITION IS

14 THAT IT STATED ON MORE THAN ONE OCCASION THAT MR. STEIN

15 HAS NOT MET WITH 24 OF THE DEFENDANTS. AND I INTERPRET

16 THAT TO MEAN HE'S SAYING THAT HE'S NOT MET OR WORKED

17 WITH ANY OF THE DEFENDANTS MENTIONED IN THE CASE,

18 ALTHOUGH THERE'S CONTRADICTORY STATEMENTS THROUGHOUT THE

19 OPPOSITION ABOUT WHO HE HAS MET AND WORKED WITH.

20 BUT JUST FOR CLARIFICATION, WE DO NOT COUNT

21 24 DEFENDANTS; BUT I'M UNDERSTANDING, WHEN MR. STEIN

22 USED THAT NUMBER, HE MEANS ALL THE OTHER DEFENDANTS.

23 MR. STEIN: AND YOUR HONOR, IN MY DECLARATION I

24 SPECIFICALLY POINT OUT HOW IT IS I MET PHIL KRAMER AND

25 WHAT WORK I DID WITH PHIL KRAMER.

26 SO I'M OBVIOUSLY NOT SAYING I NEVER WORKED

27 WITH PHIL KRAMER, AND I DON'T THINK THERE'S ANYTHING

28 WRONG WITH WORKING TOGETHER WITH A LAWYER IN THE BANK

23

1 FIELD.

2 THE COURT: I'VE GOT TO TELL YOU, THE TENTATIVE

3 THAT YOU DID NOT READ SETS FORTH LOTS OF EVIDENCE THAT

4 TIE YOU TO MANY OF THE DEFENDANTS. THEY DIDN'T HAVE TO

5 TIE YOU TO EVERY DEFENDANT. THEY HAD TO TIE YOU AS

6 BEING PART OF THE SCHEME, AND THEY DID, SUCCESSFULLY.

7 THAT'S WHAT I WANT YOU TO ADDRESS.

8 MR. STEIN: AND THAT'S WHAT I'M ADDRESSING. SO

9 THE COURT FIRST ASKED ME WHAT DEFENDANTS HAVE I NEVER

10 MET OR SPOKEN WITH.

11 MASS LITIGATION ALLIANCE, I TOLD -- IT'S

12 UNDISPUTED THAT I TOLD THE STATE BAR ABOUT THEIR

13 WRONGDOING. AND I'VE NEVER MET THEM AND NEVER

14 INTERACTED WITH THEM.

15 A MAN BY THE NAME OF MATTHEW DAVIS, WHO

16 SUBMITTED A DECLARATION. IT'S UNDISPUTED -- IT'S IN HIS

17 DECLARATION, AND I'LL QUOTE THE EVIDENCE -- THAT I'VE

18 NEVER MET HIM. IT'S UNDISPUTED THAT I TOLD HIM HE

19 COULDN'T USE MY NAME.

20 THE COURT: NO, NO, NO. IT'S NOT UNDISPUTED. IT

21 IS NOT UNDISPUTED THAT YOU NEVER MET HIM OR NEVER TALKED

22 TO HIM OR HE NEVER DID WORK FOR YOU.

23 MR. TOMA: YOUR HONOR, MATTHEW DAVIS IS NOT A

24 DEFENDANT, JUST, AGAIN, FOR POINT OF CLARIFICATION.

25 THE COURT: RIGHT. OKAY.

26 MR. STEIN: NO, BUT HIS COMPANY IS.

27 YOUR HONOR, JUST BY WAY OF EXAMPLE, EXHIBIT

28 22 TO THE DECLARATION OF MATTHEW DAVIS -- I'M READING

24

1 FROM THE STATE'S PAPERS, NOT FROM MINE -- SAYS --

2 FROM -- AND THIS IS FROM PHILIP KRAMER TO MATTHEW DAVIS.

3 I'M NOT COPIED ON IT; IT'S NOT ALLEGED I'M COPIED ON IT.

4 IT SAYS THAT:

5 "MR. STEIN PLANNED TO SIGN THEM, SET A

6 DATE TO DO SO, AND NOTICE TO YOU BY EMAIL WAS

7 GIVEN. AND THEN HE CHANGED HIS MIND."

8 AND HIS EMAIL STATES, QUOTE:

9 "MITCHELL J. STEIN & ASSOCIATES HAS

10 NOTHING TO DO WITH MATT DAVIS OR MASS

11 LITIGATION ALLIANCE."

12 THEN THERE IS ANOTHER -- THAT'S NUMBER ONE.

13 NUMBER TWO, THERE'S AN EMAIL -- AND THIS WAS

14 ALSO EXHIBIT 22 TO THE DECLARATION OF MATTHEW DAVIS.

15 AND IT SAYS:

16 "STEIN MAY CLAIM HE'S NEVER MET ME, BUT

17 THE SIMPLE FACT IS, I WAS HIRED BY HIS OF

18 COUNSEL ATTORNEY, PHILIP KRAMER, TO ASSIST

19 WITH FILES."

20 PHILIP KRAMER IS NOT ME. HE HAS NEVER MET

21 ME. AND HE SAYS I MAY CLAIM I'VE NEVER MET HIM, AND

22 THEN HIS RESPONSE TO THAT IS, HE MET PHIL KRAMER.

23 THIS HAS BEEN ON MY WEBSITE AND WAS REPORTED

24 TO THE ATTORNEY GENERAL LAST YEAR.

25 THEN -- WE'RE STILL ON THE SAME EXHIBIT, AND

26 THAT'S EXHIBIT 22 TO THE DECLARATION OF MATTHEW DAVIS,

27 FILED ON AUGUST 15. AND IT IS FROM ME. SO THIS IS

28 EVIDENCE THAT IS AUTHENTICATED BY MR. DAVIS, AND I'M NOT

25

1 OBJECTING TO IT. THE STATE PUT IT INTO EVIDENCE, AND

2 I'M NOT OBJECTING. SO THERE'S NO OBJECTION TO THE

3 EVIDENCE.

4 IT'S FROM ME, RC ADMINISTRATION. IT'S TO

5 MICHAEL WIEDERHOLD. AND IT SAYS:

6 "MR. WIEDERHOLD: MITCHELL J. STEIN AND

7 ASSOCIATES HAS NOTHING TO DO WITH MATT DAVIS

8 OR MASS LITIGATION ALLIANCE. I PERSONALLY

9 HAVE NEVER MET MATT DAVIS. THERE HAS NEVER

10 BEEN A TIME WHEN I HAVE SEEN A RETENTION

11 AGREEMENT SIGNED BY YOU.

12 "I HAVE RECEIVED DOZENS OF TELEPHONE

13 CALLS WITH PEOPLE CLAIMING THE SAME PROBLEM.

14 TO THE EXTENT YOU WISH TO BECOME A CLIENT OF

15 MITCHELL J. STEIN & ASSOCIATES, OUR TELEPHONE

16 NUMBERS AND WEBSITE ADDRESS ARE LISTED ON THE

17 STATE BAR'S WEBSITE" --

18 WHICH THEY ARE, AND THEY STILL ARE.

19 -- "OR YOU CAN CALL ME DIRECTLY BY

20 EMAILING ME OR SIMPLY ASKING ME TO DO SO.

21 KIND REGARDS, MITCH."

22 NOW -- AND THIS IS TO A CLIENT.

23 NOW, THE REQUIREMENT FOR THIS COURT TO ISSUE

24 AN INJUNCTION BECAUSE OF THE -- AND EVEN IN THE

25 DISCIPLINARY PROCEEDING, THE REQUIREMENT IS CLEAR AND

26 CONVINCING EVIDENCE; IT'S NOT A PREPONDERANCE. THERE'S

27 GOT TO BE CLEAR AND CONVINCING EVIDENCE.

28 THIS PERSON'S NAME IS MICHAEL WIEDERHOLD.

26

1 OKAY? I'VE NEVER MET THIS PERSON. HE'S A CLIENT. HE

2 WROTE ME THIS EMAIL.

3 THE CORRECT THING FOR A TRIAL LAWYER TO DO,

4 IF THERE WAS A JURY THERE, WOULD BE TO GO TO MR.

5 WIEDERHOLD AND SAY, AS AN EXAMPLE, "DID YOU -- DO YOU

6 HAVE ANY EVIDENCE THAT MR. STEIN AND MR. DAVIS EVER

7 MET?" AND TO ASK HIM.

8 THERE'S NO EVIDENCE THAT THE STATE BAR

9 INVESTIGATOR WENT TO MR. WIEDERHOLD OR THAT ANYTHING I

10 SAID IN MY EMAIL, WHICH IS AUTHENTIC, IS UNTRUE. ALL

11 YOU -- WHAT THE COURT HAS, WHAT THE COURT IS REFERRING

12 TO AS OVERWHELMING EVIDENCE, IS DECLARATIONS OF PEOPLE

13 THAT HAVE ALREADY BEEN FOUND TO HAVE COMMITTED

14 WRONGDOING, SAYING THEY MET ME IN 2010.

15 I HAVE ADMITTED I MET MR. RENEAU. I HAVE

16 ADMITTED I MET GARY -- I DON'T REMEMBER HIS LAST NAME,

17 BUT IT'S A LONG LAST NAME; I REMEMBER MEETING HIM. I

18 REMEMBER TALKING TO THEM ABOUT DOING SERVICING REGARDING

19 AN EVER-EXPANDING CLIENT BASE.

20 AND I DON'T REMEMBER MR. PHANCO AND BUTT, OR

21 WHATEVER THEIR NAME WAS, BUT I DIDN'T DENY MEETING THEM.

22 THERE IS NO OTHER PERSON THAT I REMEMBER

23 MEETING. AND THERE IS NO EVIDENCE THAT I'VE EVER MET

24 WITH ANY OTHER PEOPLE. THERE'S JUST STATEMENTS BY THESE

25 PEOPLE THAT I TOLD THEM TO DO X, Y, AND Z.

26 PRESUMING ARGUENDO THAT I TOLD MR. RENEAU TO

27 DO SOMETHING IN NOVEMBER OF 2010, AND I NEVER TALKED TO

28 HIM AGAIN, THAT IS NOT CLEAR AND CONVINCING EVIDENCE

27

1 THAT I ENGAGED IN ANY SORT OF SCAM.

2 THE CLEAR AND CONVINCING EVIDENCE REQUIRES

3 THAT THE COURT FOLLOW THE MONEY. THE STATE HAS HAD THE

4 BANK RECORDS OF MR. KRAMER FOR EIGHT MONTHS, AND THE

5 STATE CANNOT TIE ONE ENTRY IN THE BANK RECORDS TO ONE

6 ENTRY IN MY FIVE ACCOUNTS BEFORE THE LLP AND THEN FIVE

7 ACCOUNTS AFTER, WHICH IS TEN ACCOUNTS. ZERO DOLLARS.

8 SO I ENGAGED IN A SCAM REGARDING ZERO DOLLARS.

9 AND THE STATE SAYS, "WE'LL COME UP WITH SUCH

10 EVIDENCE. WE'RE GOING TO DO THAT IN THE FUTURE. MAYBE

11 MR. STEIN HAD A HIDDEN ACCOUNT," ET CETERA, ET CETERA.

12 THAT'S NOT THE WAY -- YOU KNOW, IT'S NOT

13 READY, SHOOT, AIM. IT'S READY, AIM, SHOOT.

14 THEY DID AN INVESTIGATION OF MR. KRAMER, AND

15 THEY SERVED HIM WITH A SUBPOENA. I CAN REFERENCE THAT

16 TO THE COURT, IF THE COURT IS NOT AWARE OF THAT, BUT

17 THEY SERVED MR. KRAMER WITH A SUBPOENA. MR. KRAMER

18 LAWFULLY COMPLIED. FOR EVERYTHING I KNOW, HE IS A

19 FANTASTIC MARTINDALE-HUBBELL A-RATED LAWYER. HE

20 COMPLIED WITH THE SUBPOENA, WROTE CEASE-AND-DESIST

21 LETTERS.

22 BUT MY LAW FIRM OR ME, I WAS NEVER SERVED

23 WITH SUBPOENA. IF I HAD BEEN SERVED WITH A SUBPOENA,

24 AND THE RECEIVER COULD THEN GO THROUGH THE SUBPOENA AND

25 SEE, "DID MR. STEIN RECEIVE ANY MONEY," AND I HAD

26 RECEIVED SOME MONEY, I WOULD BE HERE STIPULATING TO IT.

27 BUT THE FACT THAT YOU CAN'T FOLLOW THE TRAIL

28 OF ONE DOLLAR TO ME -- "YOU," MEANING THE STATE -- MEANS

28

1 TO ME -- AND OBVIOUSLY, NOT TO THIS COURT; AND I RESPECT

2 THIS COURT'S TENTATIVE RULINGS. BUT TO ME, IT MEANS

3 THAT SOMEONE IS GOING TO BE IN A HEAP OF TROUBLE, AND

4 IT'S NOT GOING TO BE ME, BECAUSE I DIDN'T GET ONE PENNY.

5 NOW, DID I MEET WITH PEOPLE AND EXPLAIN TO

6 THEM WHAT I HAD BEEN DOING SINCE 2009 IN FIGHTING WITH

7 THE BANKS? YES. BUT THE COURT IS DISINTERESTED AND HAS

8 INSTRUCTED ME --

9 THE COURT: OKAY. NOW, I WISH YOU WOULDN'T SAY I

10 WAS DISINTERESTED.

11 MR. STEIN: NO, BUT I'M AGREEING WITH YOU.

12 THE COURT: I AM NOT DISINTERESTED.

13 MR. STEIN: THE COURT HAS INDICATED --

14 THE COURT: I HAVE SPENT A LOT OF TIME ON THIS,

15 MR. STEIN, AND I WROTE AN EXTENSIVE TENTATIVE SETTING

16 FORTH VERY DIRECT PIECES OF EVIDENCE THAT TIE YOU TO

17 THIS.

18 MR. STEIN: OKAY. AND I'M RESPONDING TO THE

19 EVIDENCE.

20 THE COURT: SO YOU CAN STAND -- NO, YOU'RE NOT.

21 YOU'RE PICKING OUT OTHER KINDS OF THINGS, BUT YOU'RE NOT

22 RESPONDING TO THE EVIDENCE THAT'S SET FORTH THERE.

23 MR. STEIN: WELL, WHY DON'T I -- FIRST OF ALL, THE

24 ONLY THING I SAID -- AND I APOLOGIZE FOR SAYING

25 "DISINTERESTED." I SAID THE COURT SAID IT IS NOT

26 RELEVANT WHETHER OR NOT THE CASES ARE GOOD OR BAD.

27 THAT'S WHAT I WAS REFERRING TO.

28 THE COURT: NO, IT REALLY ISN'T. IT REALLY ISN'T.

29

1 MR. STEIN: RIGHT. AND SO --

2 THE COURT: I'M SURE THAT THE CASES HAVE A GREAT

3 DEAL OF MERIT. THE QUESTION IS WHETHER OR NOT THE

4 PROMISES THAT WERE MADE TO THESE PEOPLE HAVE ANY BASIS

5 IN REALITY, NUMBER ONE; AND NUMBER TWO, THE MARKETING

6 SCHEME THAT YOU ENGAGED IN AND ASKED FOR MONEY UP FRONT;

7 AND WHETHER OR NOT YOU JOINED THESE PEOPLE IN ANY

8 ACTIONS. SOME OF THEM, YOU PROBABLY DID.

9 MR. STEIN: WELL, LET --

10 THE COURT: SO THAT IS THE QUESTION, AS TO WHETHER

11 OR NOT YOU ENGAGED IN UNFAIR COMPETITION AND --

12 MR. STEIN: UNFAIR --

13 THE COURT: -- DECEPTIVE ADVERTISING. THAT IS THE

14 QUESTION HERE.

15 MR. STEIN: LET'S SPECIFICALLY, RATHER THAN --

16 RATHER THAN CITE THE COURT TO CONTRARY EVIDENCE IN THE

17 STATE'S PAPERS, I WILL JUST INDICATE THAT EVERY ITEM IN

18 THE COURT'S TENTATIVE RULING IS CONTRADICTED BY

19 DECLARATIONS THAT THE STATE HAS SUBMITTED.

20 AND I WILL POINT OUT THOSE DECLARATIONS AND

21 THAT EVIDENCE, JUST LIKE I HAVE DONE. I WILL DO WHAT

22 THE COURT HAS ASKED ME. I'LL REFER DIRECTLY TO THE

23 COURT'S EVIDENCE NOW.

24 THE COURT: OKAY. NOW, LET ME TELL YOU THIS.

25 YOUR OPPORTUNITY TO DO THAT WAS AT THE TIME YOU FILED

26 YOUR OPPOSITION, AND I AM NOT GIVING YOU FIVE HOURS TO

27 ARGUE. I'M GOING TO SET SOME TIME NOW BECAUSE WE DON'T

28 SEEM TO HAVE MUCH FOCUS.

30

1 SO WE HAVE ALREADY BEEN GOING AT THIS FOR 45

2 MINUTES. I'M GOING TO GIVE YOU 20 MORE MINUTES, AND

3 THAT'S IT.

4 MR. STEIN: IS THAT ON THE PRELIMINARY

5 INJUNCTION --

6 THE COURT: THAT'S ON THE PRELIMINARY INJUNCTION.

7 MR. STEIN: NOT ON THE ASSUMPTION.

8 THE COURT: NOT ON THE ASSUMPTION.

9 MR. STEIN: YOUR HONOR, MY RESPONSE TO THE COURT'S

10 STATEMENT THAT MY PAPERS WERE THE CHANCE TO RESPOND TO

11 THE STATE'S ALLEGATIONS. THE STATE MUST APPROVE ITS

12 CASE BY CLEAR AND CONVINCING EVIDENCE. AND IF THEY

13 HAVEN'T DONE IT, AND THEY HAVEN'T, THEN I HAVE TAKEN MY

14 OPPORTUNITY AND STATED THAT.

15 I WILL NOW ADDRESS THE COURT'S TENTATIVE AND

16 THE EVIDENCE ADDRESSED THEREIN BECAUSE THAT SEEMS TO BE

17 WHAT THE COURT WISHES ME TO DO.

18 ON PAGE 2 OF THE COURT'S TENTATIVE, THERE'S

19 A QUOTE. IT SAYS -- ON THE BOTTOM OF THE PAGE. IT

20 SAYS:

21 "DEFENDANTS' SCHEME HAS LURED THOUSANDS

22 OF DESPERATE HOMEOWNERS FACING DISCLOSURE INTO

23 PAYING THOUSANDS OF DOLLARS EACH, BASED ON

24 FALSE CLAIMS AND PROMISES. KRAMER & KASLOW

25 TOOK IN 7 MILLION IN DEPOSITS INTO JUST THREE

26 BANK ACCOUNTS IN A LIMITED TIME FRAME. IN

27 THAT SAME TIME, KRAMER & KASLOW PAID OVER

28 1.4 MILLION TO DI GIROLAMO, APC, AND OVER

31

1 $2.3 MILLION TO RENAULT'S LITIGATION

2 PROFESSIONALS, THE TWO PROCESSING CENTERS

3 WHICH OVERSAW THE MASS JOINDER MARKETING,

4 SALES, AND CLIENT SOLICITATIONS" --

5 THE COURT: OKAY. NOW, I'M GOING TO TELL YOU

6 SOMETHING. THAT'S NOT THE EVIDENCE.

7 MR. STEIN: THE EVIDENCE -- I WAS ABOUT TO GET TO

8 THE LAST SENTENCE. IT SAYS:

9 "ACCORDING TO THE REPLY, CONSUMERS HAD

10 NO IDEA THAT MOST OF THE MONEY THEY PAID WENT

11 TO SALES AGENTS AND NOT THEIR LITIGATION."

12 THIS IS "THE ALLEGED SCHEME," SUBSECTION A.

13 MY NAME, ON THE COURT'S TENTATIVE, APPEARS IN SUBSECTION

14 A ON PAGE 2 -- AND THIS IS ONLY SUBSECTION A -- ONE

15 TIME, AT THE NEW PARAGRAPH 3 OF THE PAGE. AND IT SAYS,

16 QUOTE:

17 "DEFENDANTS TELL HOMEOWNERS THAT A

18 SETTLEMENT COULD HAPPEN AT ANY TIME, AND ONLY

19 THOSE WHO JOIN THE LAWSUIT WILL RECEIVE

20 BENEFITS. DEFENDANTS REPEATEDLY MAKE FALSE

21 AND MISLEADING STATEMENTS TO GET HOMEOWNERS TO

22 SIGN THE KRAMER OR STEIN ATTORNEY RETAINER

23 AGREEMENTS AND PAY THE RETAINER FEE."

24 I'M STOPPING THERE.

25 THE STATE HAS NOT PUT INTO EVIDENCE ONE SUCH

26 RETAINER AGREEMENT SIGNED BY ME, AND THEY HAVE NOT PUT

27 IN ONE DOLLAR OF RETAINER FEES PAID TO ME UNDER ANY

28 ALLEGED SCAM. THAT'S A FACT. AND THEY HAVE TO DO IT BY

32

1 CLEAR AND CONVINCING EVIDENCE.

2 IF THE COURT OR THE PEOPLE BELIEVE THEY HAVE

3 PUT SUCH EVIDENCE IN, JUST REFERENCE THE EVIDENCE TO ME,

4 AND I'LL LOOK AT IT AND RESPOND TO IT. BUT IT'S NOT

5 THERE. I DON'T NEED TO REFERENCE THE EVIDENCE.

6 THERE'S NOT ONE RETAINER AGREEMENT OF MINE

7 IN EVIDENCE, AND THERE'S NOT ONE DOLLAR OF MONEY PAID TO

8 ME IN EVIDENCE. AND THE STANDARD IS CLEAR AND

9 CONVINCING EVIDENCE.

10 I'LL NOW GO TO SUBSECTION B OF THE COURT'S

11 TENTATIVE, WHICH IS ENTITLED "GENERAL ALLEGATIONS

12 AGAINST DEFENDANT STEIN AND STEIN & ASSOCIATES."

13 THE COURT: OKAY. SO THESE ARE ALLEGATIONS.

14 MR. STEIN: CORRECT. AND IF YOU WANT ME JUST TO

15 GO TO THE EVIDENCE, IF THAT'S BETTER, GIVEN THAT I'M

16 LIMITED ON TIME --

17 THE COURT: YOU'VE GOT YOUR 20 MINUTES.

18 MR. STEIN: OKAY.

19 THE COURT: USE IT HOWEVER YOU WANT. I'VE

20 INDICATED THAT THERE'S SPECIFIC EVIDENCE IN THERE.

21 MR. STEIN: PARAGRAPHS 72 AND -- NOW I'M ON PAGE

22 4. I'M GOING TO EVIDENCE. I'M ON PAGE 4, "C. EVIDENCE,

23 APPROVAL OF THE FRAUDULENT MAILERS."

24 "ACCORDING TO PARAGRAPHS 72 AND 73 OF

25 THE THOMAS LAYTON DECLARATION" -- WHO NEVER

26 INTERVIEWED ME OR ANYBODY THAT WORKS FOR ME --

27 QUOTE:

28 "'DURING MY INVESTIGATION, I BECAME

33

1 AWARE OF DAMIAN KUTZNER'" --

2 WHO IS AT BROOKSTONE, WHO WE KNOW HAS ISSUED

3 AN UNLAWFUL MAILER, I ARGUE. THE COURT MAY DISAGREE

4 WITH ME, BUT IT'S OF RECORD.

5 -- "'WHO IS A NONATTORNEY THAT HAS HAD A

6 BUSINESS RELATIONSHIP WITH KRAMER, STEIN. WE

7 MET ON JULY 12, 2011 IN PERSON. KUTZNER

8 INFORMED ME'" --

9 AND I OBJECTED TO THIS, AND THE COURT

10 SUSTAINED THE OBJECTION, SO I'M NOT GOING TO READ ANY

11 MORE. THAT EVIDENCE IS GONE.

12 IF THE COURT WANTS ME TO CONTINUE TO TALK

13 ABOUT KUTZNER AND THE $8 MILLION FTC JUDGMENT AGAINST

14 HIM, I WILL. I'VE SUBMITTED THAT INTO EVIDENCE IN MY EX

15 PARTE. AND SO THE REST OF THAT IS GONE.

16 SO NOW THE EVIDENCE ON PAGE 4, BOTTOM OF THE

17 PAGE, IS GONE.

18 THE COURT: WHAT EVIDENCE IS GONE? I'M SORRY.

19 MR. STEIN: THE EVIDENCE OF WHAT KUTZNER TOLD MR.

20 LAYTON.

21 THE COURT: YEAH, AND THAT'S IT. "IT'S ALL ABOUT

22 THE MONEY." THAT IS WHAT I SUSTAINED IT TO, AND THAT'S

23 IT. NOT THAT THERE WAS A CONVERSATION, NOT THAT HE

24 WASN'T INVOLVED WITH YOU, NOT -- OKAY. SO THE ONLY

25 OBJECTION THAT I SUSTAINED WAS WHAT YOU SAID.

26 MR. STEIN: RIGHT.

27 THE COURT: YOU HELD UP THE CHECKS AND SAID, "IT'S

28 ALL ABOUT THE MONEY."

34

1 MR. STEIN: THAT'S CORRECT. THAT'S WHAT YOU --

2 THE COURT: OKAY. BUT THAT WAS NOT DECISIVE IN

3 THIS CASE.

4 MR. STEIN: WELL, IN ANY EVENT, THE OBJECTION WAS

5 SUSTAINED TO IT.

6 AND THE COURT HAS IN ITS FILES, FILED ON

7 SEPTEMBER 19, A MAILER THAT IS CRIMINAL IN NATURE, BY

8 BROOKSTONE LAW, AND IRREFUTABLE EVIDENCE THAT DAMIAN

9 KUTZNER, AS THE COO OF THAT COMPANY -- IF THE COURT

10 BELIEVES THAT KUTZNER'S STATEMENT TO MR. LAYTON OF WHAT

11 HAPPENED WHEN HE MET WITH ME IS CLEAR AND CONVINCING

12 EVIDENCE, I'M JUST GOING TO GO ON. I'VE MADE THE

13 RECORD. I ALREADY MADE THE RECORD IN THE EX PARTE.

14 NO. 2: "RELATIONSHIP WITH GARY D.

15 DI GIROLAMO." DEFENDANT STEIN PUT OUT A PRESS RELEASE

16 STATING:

17 "CONTRARY TO THE COUNTERFEIT

18 SOLICITATION AND PUBLIC STATEMENTS, MITCHELL

19 J. STEIN & ASSOCIATES IS NOT AFFILIATED WITH

20 MATT DAVIS, GARY DI GIROLAMO, CHRIS FOX, AND

21 BILL STEPHENSON OR WITH ANY OF THEIR

22 ASSOCIATES OR COMPANIES. (SEE EXHIBIT 2 TO

23 THE DECLARATION OF JAMES TOMA.)

24 "HOWEVER, ON MAY 4, GARY DI GIROLAMO

25 SUBMITTED A RESPONSE TO JAMES TOMA OF THE

26 CALIFORNIA DEPARTMENT OF JUSTICE WHERE HE

27 INDICATES IN ANSWER 23 THAT, QUOTE, 'I HAVE

28 BEEN AFFILIATED WITH MITCHELL J. STEIN. THIS

35

1 WAS IN A DATA MANAGEMENT AND FILE MANAGEMENT

2 ROLE, UNDER MR. STEIN'S DIRECTION AND

3 CONTROL,'" PERIOD, END OF QUOTE. "SEE EXHIBIT

4 7 TO DECLARATION OF JAMES TOMA."

5 I ADMITTED THAT IN MY DECLARATION. I

6 ATTEMPTED TO USE MR. DI GIROLAMO FOR DATA MANAGEMENT AND

7 FILE MANAGEMENT. THAT IS NOT UNFAIR COMPETITION. THAT

8 IS COMPUTERS AND FILE MANAGEMENT OF MY CLIENTS.

9 THEN LATER IT SAYS, "IN LATE" -- IT'S

10 QUOTING ME.

11 "IN LATE 2010, I AGREED TO ALLOW

12 ATTORNEY PROCESSING CENTER TO PERFORM

13 SERVICING FUNCTIONS FOR THE FIRM'S CLIENTS,"

14 PERIOD, END OF QUOTE.

15 WHICH IS EXACTLY WHAT I DID.

16 "INDEED, THERE ARE SEVERAL EMAILS

17 BETWEEN STEIN AND DI GIROLAMO DISCUSSING THE

18 RONALD ACTION, AS WELL AS OTHER BUSINESS

19 DETAILS. SEE EXHIBIT 7 TO DECLARATION OF

20 JAMES TOMA. SEE EXHIBIT 23 OF MATTHEW DAVIS'S

21 DECLARATION."

22 EXHIBIT 23 OF MATTHEW DAVIS'S DECLARATION

23 ABOUT THESE SUPPOSED EMAILS IS -- "YOU SAID, 'SEND THE

24 HANDWRITTEN NOTE'" -- THIS IS THE EVIDENCE THAT'S BEING

25 RELIED UPON.

26 "GARY, YOU SAID, 'SEND THE HANDWRITTEN

27 NOTE TO THE CLIENTS THAT I GAVE YOU.'"

28 THAT'S THE DATA BASE CLIENTS THAT WERE MY

36

1 CLIENTS.

2 "PLEASE SEND ME THE FORMAT AND ANY

3 DOCUMENTS ACCOMPANYING THE HANDWRITTEN NOTE.

4 THEN I WILL DETERMINE WHAT TO DO NEXT.

5 THANKS, MITCH."

6 I DON'T BELIEVE THAT AMOUNTS TO UNFAIR

7 COMPETITION. THE HANDWRITTEN NOTE, YOUR HONOR -- AND IF

8 YOU LOOK AT DECEMBER 20TH -- WAS A CHRISTMAS CARD TO ALL

9 OF MY CLIENTS, DECEMBER 20TH BEING FIVE DAYS BEFORE

10 CHRISTMAS.

11 IF THE COURT FINDS THAT ENOUGH EVIDENCE TO

12 ISSUE A PRELIMINARY INJUNCTION, IT'S FINE. WE'VE MADE

13 THE RECORD.

14 NOW WE'LL GO ON WITH THE EVIDENCE AGAINST

15 MITCHELL STEIN. A CHRISTMAS CARD AND -- SO FAR, AND A

16 DECLARATION OF THOMAS LAYTON, WHERE HE MET WITH SOMEBODY

17 AT A STARBUCKS -- WHICH IS HEARSAY -- AND WHICH THAT

18 PERSON ISSUED A FRAUDULENT MAILER AND HAS NEVER HAD

19 ANYTHING HAPPEN TO HIM.

20 IN ADDITION TO THAT, THAT THAT PERSON HAS

21 STOLEN MONEY FROM LEGASPI, A DECLARATION THAT WE

22 SUBMITTED, WHICH ISN'T DISCUSSED IN HERE.

23 AND I THINK THAT DAMIAN KUTZNER IS NOT A

24 BELIEVABLE WITNESS. I WOULD OBVIOUSLY REMIND THE COURT

25 WHAT IT ALREADY KNOWS: A WITNESS FALSE IN ONE PART OF

26 HIS TESTIMONY, THE COURT IS ENTITLED TO DISBELIEVE

27 EVERYTHING HE SAYS. NORMAL CACI INSTRUCTION.

28 THE COURT: THAT IS ABSOLUTELY RIGHT: IF A

37

1 WITNESS IS FALSE IN ONE PART OF THEIR TESTIMONY, THE

2 COURT IS ENTITLED TO IGNORE EVERYTHING ELSE THEY SAY.

3 MR. STEIN: THE NEXT THING SAYS:

4 "FORWARDED NUMBER WILL BE ANSWERED, 'LAW

5 OFFICES. MAY I HELP YOU?' SEE TOMA

6 DECLARATION."

7 I DON'T BELIEVE THAT THERE'S ANY UNFAIR

8 COMPETITION THERE. HE WAS FOR TWO MONTHS GOING TO

9 SERVICE MY CLIENTS. TO THE EXTENT THEY CALLED AND THEY

10 NEEDED A DOCUMENT OUT OF HIS COMPUTERS, HE WOULD SEND IT

11 TO THEM.

12 THE NEXT PIECE OF EVIDENCE IS: "STEIN

13 ADVISING" -- I'M ON THE --

14 THE COURT: WAS HE AT YOUR OFFICES?

15 MR. STEIN: I'M SORRY. WHAT?

16 THE COURT: WAS HE AT YOUR OFFICES?

17 MR. STEIN: NEVER. HE HAD AN OFFICE IN ORANGE

18 COUNTY, AS I UNDERSTOOD IT.

19 THE COURT: IS HE A LAWYER?

20 MR. STEIN: MR. DI GIROLAMO -- HE'S NOT A LAWYER.

21 THE COURT: NO.

22 MR. STEIN: AND HE WAS SUPPOSED TO --

23 THE COURT: "LAW OFFICES." OKAY.

24 MR. STEIN: HE IS SUPPOSED TO --

25 THE COURT: HE ANSWERED, "LAW OFFICES."

26 MR. STEIN: THAT'S CORRECT, BECAUSE AS A STAFF

27 MEMBER OF MY LAW OFFICE, HE WOULD ANSWER, "LAW OFFICES."

28 THE PERSON WOULD STATE WHAT THEY WANTED, AND HE WOULD

38

1 REFER THE CALL TO MYSELF OR ONE OF THE SEVEN LAWYERS

2 THEN WORKING FOR ME.

3 AND THAT'S ALL I AUTHORIZED HIM TO DO, AS

4 THE TOMA DECLARATION, EXHIBIT 7(D), SAYS.

5 I'M STILL ON THE TOP OF PAGE 6:

6 "STEIN ADVISING DI GIROLAMO THAT HE

7 SHOULD NOT USE THE IRVINE ADDRESS" --

8 THAT'S FURTHER EVIDENCE THAT I DIDN'T WANT

9 HIM HOLDING HIMSELF OUT AS HIS LAWYER.

10 -- "BUT SHOULD USE THE WALNUT CREEK

11 ADDRESS. AS STEIN NOTES IN HIS EMAIL," QUOTE,

12 "'YOU MUST STOP USING IRVINE AS MITCHELL J.

13 STEIN'S ADDRESS BECAUSE IT IS AN ADDRESS THAT

14 I DO NOT UTILIZE ACTIVELY, AND I AM

15 UNCOMFORTABLE HAVING DOCUMENTS BEARING THAT

16 ADDRESS ASSOCIATED WITH ME.'"

17 THIS IS --

18 THE COURT: IS THAT MR. DI GIROLAMO?

19 MR. STEIN: NO, THAT'S ME SAYING THIS TO

20 DI GIROLAMO, COMPLAINING.

21 THE COURT: I KNOW, BUT IS THAT HIS ADDRESS?

22 MR. STEIN: I BELIEVED IRVINE WAS HIS ADDRESS.

23 AND HE DID STOP AT THAT POINT, AND THAT WAS IN DECEMBER

24 OF 2010.

25 THE COURT: OKAY.

26 MR. STEIN: THE NEXT PIECE OF EVIDENCE IS, ON

27 DECEMBER 16TH, I WROTE MR. DI GIROLAMO AND SAID:

28 "WITH REGARD TO AN EMAIL ADDRESS, I WILL

39

1 FORM A NEW ONE ON GMAIL AND GIVE YOU THE PASS

2 CODE. THEN YOU CAN USE THAT EMAIL ADDRESS AND

3 YOUR NEW 310 FAX NUMBER TO GET ALL THE

4 INFORMATION YOU WANT TO PROPERLY PROTECT THE

5 CLIENTS."

6 WE NEED DEEDS OF TRUST, MORTGAGES,

7 CORRESPONDENCE WITH THE BANKS. WE NEED THEM PUT INTO A

8 COMPUTER SYSTEM. THAT'S WHAT A SERVICING AGENT DOES.

9 THAT ENTIRE ARRANGEMENT CEASED AS OF THE

10 BEGINNING OF JANUARY AND, AS THE RECEIVER ADMITTED,

11 COMPLETELY CEASED AS OF FEBRUARY, WHEN THE HEARING IN

12 FRONT OF JUDGE HIGHBERGER HAPPENED.

13 I WAS ATTEMPTING TO USE OUTSOURCING

14 SERVICING OF CLIENTS, AND DETERMINED THAT IT ALL HAD TO

15 BE DONE UNDER ONE ROOF BECAUSE ALL THESE ENTITIES WERE

16 FORMING.

17 THAT IS NOT CLEAR -- I WOULD ARGUE, IS NOT

18 CLEAR AND CONVINCING EVIDENCE OF ANY WRONGDOING

19 WHATSOEVER. IT'S EVIDENCE OF ME TRYING TO GET PEOPLE TO

20 ACT THE WAY I WANTED THEM TO, NOT BEING ABLE TO, AND

21 CHANGING. AND I DID.

22 HAD MR. LAYTON INTERVIEWED MR. BUTTERWORTH,

23 WHO IS THE COURTROOM TODAY, OR MS. SOTO OR ANY OF THE

24 OTHER -- OR MS. KRANTZ, OR ANY OF THE OTHER PEOPLE THAT

25 WORKED FOR MITCHELL J. STEIN & ASSOCIATES, THEY WOULD

26 HAVE LEARNED THE TRUTH.

27 AND THESE PEOPLE SUBMITTED AFFIDAVITS TO THE

28 COURT OF EXACTLY WHAT I DID DO, THE COURT DOESN'T

40

1 MENTION ANY OF THE EVIDENCE IN THOSE AFFIDAVITS IN HERE.

2 AND THEN IT SAYS:

3 "THUS, CONTRARY TO THE PRESS RELEASE OF

4 MARCH 17, STEIN CLEARLY WAS IN BUSINESS WITH

5 DI GIROLAMO AND ATTORNEY PROCESSING CENTER."

6 THAT'S A CONCLUSION BASED ON THE EVIDENCE, I

7 UNDERSTAND. AND I COMPLETELY DISAGREE WITH THAT.

8 THE --

9 AND THIS IS VERY IMPORTANT, THIS PARTICULAR

10 POINT. IF THERE'S NOTHING ELSE REMEMBERED, THIS IS THE

11 POINT THAT I WISH THE COURT TO REMEMBER, IN GOOD FAITH.

12 ON PAGE 5, AT THE BEGINNING OF PARAGRAPH 2,

13 "RELATIONSHIP WITH GARY DI GIROLAMO," THE COURT SAYS:

14 "ON MARCH 17, 2011, STEIN PUT OUT A

15 PRESS RELEASE STATING: 'CONTRARY TO THE

16 COUNTERFEIT SOLICITATIONS'" --

17 I'M NOT AFFILIATED WITH GARY DI GIROLAMO,

18 MATT DAVIS, ET CETERA. THAT'S MARCH 17.

19 THE COURT CONCLUDES THAT THAT'S A LIE

20 BECAUSE ON DECEMBER 20, I'M WRITING MR. DI GIROLAMO A

21 LETTER. THAT'S JUST UNFAIR AND WRONG. I WAS INVOLVED

22 WITH MR. DI GIROLAMO ON DECEMBER 20, BUT NOT ON MARCH

23 17.

24 AND FOR THE COURT TO CONCLUDE THAT THE MARCH

25 17 PRESS RELEASE WAS WRONG BECAUSE I WROTE SOMETHING ON

26 DECEMBER 20TH, IT'S THE SAME ILLOGICAL, RIDICULOUS

27 CONCLUSIONS THAT THE STATE ARE MAKING.

28 HOW -- ON MARCH 17 -- WHERE'S THE EMAIL

41

1 AFTER MARCH 17, OR EVEN WITHIN A MONTH OF MARCH 17, FROM

2 ME TO GARY DI GIROLAMO SHOWING THAT WE'RE STILL IN

3 BUSINESS? THE EMAIL IS FROM DECEMBER.

4 WHY IN THE WORLD IS A TRIER OF FACT, UNDER

5 CLEAR AND CONVINCING EVIDENCE, REACHING THE CONCLUSION

6 THAT IN MARCH, I WAS INVOLVED WITH A PERSON WHO I

7 EMAILED IN DECEMBER?

8 THE COURT: AND THAT YOU WERE IN BUSINESS WITH.

9 MR. STEIN: I WAS IN BUSINESS WITH. HOW -- WHAT

10 IS THAT CONCLUSION BASED ON? WHAT OTHER EVIDENCE DO I

11 HAVE TO ADDRESS FOR THE COURT SO THAT I CAN CLEAR UP

12 THIS SITUATION, WHICH HURTS THOUSANDS OF CLIENTS ACROSS

13 THE COUNTRY?

14 ALTHOUGH, WHEN WE GET TO THE LAW PRACTICE

15 PROCEEDING, THE STATE HAS SAID I COULD PRACTICE WITH ANY

16 LLP I WANT. THEY CAN BRING A DISCIPLINARY ACTION

17 AGAINST ME. THEY'RE GOING TO LOSE BECAUSE IN THE STATE

18 BAR COURT AND THE SUPREME COURT, A DECEMBER 20 EMAIL

19 DOES NOT PROVE I'M IN BUSINESS WITH SOMEONE ON MARCH 17

20 OF THE NEXT YEAR.

21 THE COURT: NO, IT'S THE COLLECTIVE EVIDENCE THAT

22 SHOWS YOU ENGAGED IN THIS.

23 MR. STEIN: OKAY. WELL, LET'S GO INTO THE --

24 THE COURT: IT IS THE COLLECTIVE EVIDENCE, AND IT

25 IS OVERWHELMING.

26 MR. STEIN: SO WHAT IS THE OTHER EVIDENCE? I'VE

27 RECITED SO FAR -- AND I'LL CONTINUE TO GO THROUGH. I'VE

28 RECITED --

42

1 THE COURT: YOU NOW HAVE SEVEN MINUTES.

2 MR. STEIN: OKAY. I'LL CONTINUE TO GO THROUGH.

3 NO. 3, "RELATIONSHIP WITH GLEN RENEAU."

4 GLEN STATES:

5 "I'M AN EMPLOYEE OF K2 LAW...THE

6 ATTORNEYS IN THAT CASE ARE.. MITCHELL STEIN...

7 K2 LAW HAS A REFERRAL ARRANGEMENT WITH

8 MITCHELL J. STEIN."

9 THESE ARE ALL STATEMENTS WITH GLEN RENEAU.

10 ON THE BOTTOM OF PAGE 6:

11 "STEIN ADMITS HAVING MET RENEAU" --

12 I DID MEET RENEAU; THAT'S CORRECT.

13 RENEAU EMAILED ME, STATING WHETHER THERE

14 WERE ANY CONCRETE RESULTS SO FAR IN THE RONALD CASE. IN

15 RESPONSE, STEIN INDICATED THE FOLLOWING RESULTS WERE

16 OKAY TO REPRESENT.

17 AND THEN THERE'S A QUOTATION ON THE TOP OF

18 PAGE 7 THAT COMES FROM AN EMAIL FROM RENEAU. I NEVER

19 AGREED TO THIS EMAIL. I NEVER WROTE HIM SAYING HE HAS

20 TO DO THAT. THERE'S NO EVIDENCE THAT I DID THAT. THESE

21 WERE THE THINGS THAT CAUSED ME TO BECOME UNINVOLVED WITH

22 THESE PEOPLE.

23 HOWEVER, THERE WERE SIX NOTICES OF DEFAULT

24 RESCINDED IN THE RONALD CASE. THAT IS A FACT. IT WAS

25 DONE AT AN EX PARTE HEARING BY STIPULATION INSTEAD OF

26 COURT ORDER. THERE WERE SALE DATES POSTPONED BY

27 STIPULATION AND EX PARTE HEARING.

28 THEY SIMPLY PUFFED IT INTO OBTAINING

43

1 INJUNCTIONS FROM JUDGE CHANEY, WHO -- AND WE'RE NOT

2 GOING TO GO INTO THE -- WHETHER THE CASE IS GOOD OR BAD,

3 BUT THOSE RESULTS DID HAPPEN. BUT I NEVER TOLD HIM TO

4 PUT THIS OUT.

5 CALL CENTERS. THERE IS SIMPLY -- ON PAGE 7,

6 MY NAME IS SIMPLY NOT MENTIONED, OTHER THAN THE MOVING

7 PAPERS, WHICH, I BELIEVE, IS NOT EVIDENCE. MY NAME IS

8 NOT MENTIONED. IT'S JUST TALKING ABOUT THOMAS LAYTON;

9 JUANA DALY, WHO I DON'T KNOW WHO THAT IS; AND MITIGATION

10 PROFESSIONALS.

11 AND THEN MATTHEW DAVIS SAYS DI GIROLAMO

12 EXPLAINED TO HIM THE LOAN MODIFICATION SHOPS WERE

13 BECOMING LAW FIRMS SO THEY WOULD REFER CLIENTS TO

14 KRAMER, NOT TO MITCHELL STEIN.

15 EVERYTHING IN HERE TALKS ABOUT KRAMER AND IS

16 EVIDENCE FROM PEOPLE THAT HAVE ALREADY BEEN FOUND TO

17 HAVE RECEIVED MONEY. THERE'S NO EVIDENCE I RECEIVED ANY

18 MONEY. THERE'S NO EVIDENCE I EVER WROTE ANY OF THESE

19 PEOPLE AND TOLD THEM TO DO THAT.

20 THE ONLY EVIDENCE IS, I MET WITH THEM WHEN

21 THE FEDERAL INVESTIGATION STARTED AT END OF 2010, AND I

22 WAS DONE WITH THEM IN JANUARY OF 2011. THAT'S THE

23 EVIDENCE THAT I SUBMITTED. THAT'S THE EVIDENCE THAT THE

24 STATE SUBMITTED.

25 AND THERE'S REALLY NO REASON TO BELABOR IT.

26 THE COURT KNOWS THIS. AND I DO APPRECIATE THE COURT HAS

27 READ THESE PAPERS CAREFULLY. THE COURT BELIEVES THAT

28 THERE'S -- THAT THE EVIDENCE IS OVERWHELMING AND HAS SO

44

1 RULED, AND I DISAGREE.

2 TO GO THROUGH EVERY PIECE OF EVIDENCE OF

3 WHAT GLEN RENEAU SAID OR GARY DI GIROLAMO SAID OR WHAT

4 EVERYONE ELSE SAID, IT'S ALL THERE FOR ANYONE TO LOOK

5 AT. SO WE CAN -- WE OBVIOUSLY DISAGREE.

6 THE INJUNCTION JUST SAYS I WILL NOT LIE TO

7 ANY CONSUMERS. I'M WILLING TO STIPULATE TO THE

8 INJUNCTION, ANYWAY. I NEVER HAVE. THERE'S NO CONSUMER

9 EVER STATING SUCH.

10 AND I CHALLENGE THE PEOPLE TO FIND ME A

11 CONSUMER -- A CLIENT, LIKE THE PEOPLE SITTING IN THIS

12 COURTROOM -- WHO HAVE SAID THAT I SAID ONE THING TO THEM

13 THAT WAS FALSE, ONE THING, AND THAT I DID NOT AT ALL

14 TIMES TELL THEM THAT I WAS UNAFFILIATED WITH THESE

15 PEOPLE.

16 IF THEY HAD A CLIENT DECLARATION -- THEY

17 SUBMITTED 17 OF THEM. IF THEY SUBMITTED A CLIENT

18 DECLARATION THAT I SAID SOMETHING WRONG TO THEM, THIS

19 WOULD BE A DIFFERENT CASE. THEY'RE SUBMITTING

20 DECLARATIONS OF PEOPLE WHO GOT PAID MONEY. OF COURSE

21 THEY'RE GOING TO SAY THINGS. THAT'S NOT CLEAR AND

22 CONVINCING EVIDENCE.

23 I WILL END HERE, GIVEN THE FACT THAT THERE

24 IS NO CONSUMER DECLARATION; AND HOPEFULLY, I'VE

25 COMPLETED IT IN UNDER 20 MINUTES. BUT I DO WISH TO

26 ARGUE IN DETAIL REGARDING THE FREEZE ORDERS, GIVEN THE

27 BANKRUPTCY COURT'S ORDER YESTERDAY, AND PERHAPS EITHER

28 COME TO A STIPULATION OR AN UNDERSTANDING OF WHAT

45

1 OCCURRED.

2 THE COURT: OKAY. THANK YOU.

3 MR. STEIN: THANK YOU, YOUR HONOR.

4 THE COURT: ALL RIGHT. DOES ANYBODY FROM THE

5 PEOPLE WANT TO ADDRESS THIS?

6 MR. TOMA: YES, YOUR HONOR. JAMES TOMA ON BEHALF

7 OF THE PEOPLE. I WILL BE VERY BRIEF, YOUR HONOR.

8 I JUST WANTED TO STATE THAT THE PEOPLE DO

9 NOT SUBMIT TO THE REPRESENTATIONS MADE BY MR. STEIN AS

10 TO WHAT HAPPENED IN THE BANKRUPTCY COURT YESTERDAY. I

11 JUST WANTED TO STATE THAT FOR THE RECORD.

12 AS THE COURT HAS ALREADY STATED, THE

13 EVIDENCE IS OVERWHELMING WITH RESPECT TO MR. STEIN'S

14 INVOLVEMENT IN THE VENTURE. WE HAVE EMAILS AND

15 DECLARATIONS FROM SALES AGENTS AND MARKETERS SAYING MR.

16 STEIN PITCHED THEM THE MARKETING REPRESENTATIONS.

17 WE'VE TALKED BRIEFLY ABOUT THESE STATEMENTS

18 MADE, THAT ARE PRESENTED TO THE COURT IN EXHIBIT 73,

19 ABOUT THE ORDERS IN THE RONALD CASE, INJUNCTIONS THAT

20 DID NOT EXIST, COUNTLESS ADDITIONAL ORDERS STOPPING

21 FORECLOSURE SALES.

22 THESE WERE MADE SPECIFICALLY TO DEFENDANT

23 GLEN RENEAU, KNOWING FULL WELL THAT THESE WERE THE KINDS

24 OF REPRESENTATIONS THAT CONSUMERS WANTED TO KNOW BEFORE

25 THEY WOULD BE WILLING TO SIGN UP FOR A MASS JOINDER

26 CASE.

27 MR. STEIN DIRECTLY AUTHORIZED THOSE

28 REPRESENTATIONS TO BE MADE. THEY APPEAR ON NUMEROUS

46

1 WEBSITES THE DEFENDANTS USED, AND HE CANNOT DISCLAIM

2 RESPONSIBILITY FOR THEM. SIMPLY BECAUSE HE MAY NOT HAVE

3 BEEN THE ONE WHO DIRECTLY SPOKE TO A PARTICULAR

4 CONSUMER, HE HAD FULL KNOWLEDGE THAT THESE WERE BEING

5 USED BY SALES AGENTS FOR THEIR MARKETING SCRIPTS, AND

6 THESE WERE PUT OUT THERE ALL OVER THE PLACE.

7 AND THAT IS HOW CONSUMERS WERE PERSUADED TO

8 ENTER INTO THESE JOINDERS, ON THE FALSE BELIEF THAT

9 THESE SUCCESSES HAD BEEN ACHIEVED. I THINK THAT

10 EVIDENCE IS VERY CLEAR.

11 WITH RESPECT TO THE EVIDENCE ON MR.

12 DI GIROLAMO, THERE ARE EMAILS THAT ARE PART OF MY

13 DECLARATION -- EXHIBIT 7(C), FOR EXAMPLE -- WHERE GARY

14 DI GIROLAMO TOLD MR. STEIN THAT HE HAD 400 RETAINERS OUT

15 FOR SIGNING.

16 HE WAS CLEARLY MARKETING MR. STEIN'S

17 RETAINER AGREEMENT. HE WASN'T JUST SERVICING SOME

18 CLIENTS. HE WAS OUT THERE GETTING NEW CLIENTS. AND HE

19 ALSO REFERS TO THE FACT THAT MR. RENEAU HAS SOME

20 ADDITIONAL RETAINERS OUT THERE. SO THEY'RE OUT THERE

21 GATHERING CONSUMERS AND GETTING CLIENTS FOR MR. STEIN

22 AND MR. KRAMER.

23 THERE IS THE EMAIL FROM THE RECEIVER EXHIBIT

24 73 WHERE MR. STEIN THREATENS TO BAIL OUT OF HIS

25 ARRANGEMENT WITH MR. DI GIROLAMO BECAUSE OF ONE BOUNCED

26 CHECK. AND THERE'S THAT BACK-AND-FORTH, WHICH SHOWS

27 EVIDENCE THAT MR. STEIN WAS RECEIVING MONEY THROUGH THIS

28 PROCEDURE AND THROUGH THIS MARKETING SCHEME.

47

1 MR. DI GIROLAMO RESPONDS BACK TO MR. STEIN

2 THAT, "WE PROCESS 300-PLUS DEPOSITS A WEEK FOR YOU, AND

3 THE CHECKS ARE ALWAYS CLEARED VIA PHIL KRAMER."

4 WE ALSO HAVE THE MORE RECENT MAY 2011 EMAIL

5 THAT WAS SUBMITTED WITH THE REPLY, IN WHICH KRAMER TELLS

6 MR. STEIN THAT HE'S ONCE AGAIN THROWN HIM UNDER THE BUS,

7 WITH RESPECT TO REPRESENTATIONS THAT MR. STEIN MADE TO A

8 CLIENT OR A PURPORTED CLIENT, SAYING, "I HAD NOTHING TO

9 DO WITH THIS. THIS IS SOMETHING ABOUT WITH YOU AND MR.

10 KRAMER.

11 MR. KRAMER TELLS MR. STEIN, "WE HAD THIS

12 AGREEMENT. YOU KNOW THAT WE -- I, MR. KRAMER, PAID FOR

13 A LOT OF THINGS THROUGH OUR JOINT VENTURE. AND HERE YOU

14 ARE, AGAIN, THROWING ME UNDER THE BUS, WITH RESPECT TO

15 THESE CONSUMERS AND CLIENTS THAT ARE OUT THERE."

16 MR. STEIN REPRESENTS THAT HE WAS DONE WITH

17 THIS WHOLE VENTURE -- I BELIEVE HE SAYS IN JANUARY. IN

18 FEBRUARY, YOU'LL SEE THAT MR. STEIN AND HIS ASSOCIATES

19 TRY TO GET, BY STIPULATION, THE ADDITION OF SOME 349

20 CLIENTS TO THE RONALD CASE.

21 IF YOU LOOK AT THE DAVIS DECLARATION, YOU'LL

22 SEE THE VERY DETAILED STATEMENTS ABOUT HOW THE OTHER

23 DEFENDANTS WERE GATHERING THESE CLIENTS FOR MR. STEIN'S

24 RONALD CASE; HOW MR. STEIN HAD REFUSED TO GO IN EX

25 PARTE, LIKE THEY HAD EXPECTED HIM TO; AND YET MR. STEIN

26 SAYS THAT HE WAS NOT INVOLVED WITH MR. KRAMER. HE SAYS

27 THAT IN COURT ON FEBRUARY 3RD.

28 A FEW DAYS LATER, HE PROPOSES TO ADD ABOUT

48

1 349 CLIENTS TO HIS CASE. AND IF YOU LOOK AT THE LIST OF

2 THE CLIENTS, WHICH IS ATTACHED TO THE CEKIRGE

3 DECLARATION, THOSE ARE ALL CLIENTS WITH WHICH -- WHICH

4 MATCH THE SAME CLIENTS THAT THE OTHER DEFENDANTS WERE

5 ATTEMPTING TO SOLICIT INTO THE MASS JOINDER CASE.

6 AND SHORTLY THEREAFTER, WHEN MR. STEIN

7 APPARENTLY REFUSED TO ADD THEM OR GO FORWARD ON THE

8 MATTER, SOME 300 OF THOSE CLIENTS WERE THEN SWITCHED

9 OVER TO THE KRAMER CASE SHORTLY THEREAFTER.

10 HE IS CLEARLY INVOLVED WITH MR. KRAMER AND

11 THESE OTHER DEFENDANTS. THE EVIDENCE IS OVERWHELMING

12 WITH RESPECT TO HIS RESPONSIBILITY FOR THE FALSE AND

13 MISLEADING MARKETING, WITH HIS INVOLVEMENT IN THE

14 SOLICITATIONS THROUGH SALES AGENTS, THROUGH THE RUNNING

15 AND CAPPING AND FEE-SPLITTING SCHEME.

16 AND JUST FOR CLARIFICATION, THE STANDARD IS

17 NOT CLEAR AND CONVINCING EVIDENCE, AS MR. STEIN

18 CONTINUES TO SAY. IT IS -- AS DISCUSSED IN THE MOVING

19 PAPERS, IT IS A REASONABLE PROBABILITY OF SUCCESS. THAT

20 IS THE ACTUAL STANDARD. AND WE BELIEVE THAT THE PEOPLE

21 HAVE SHOWN, BY FAR -- THROUGH A GREAT DEAL OF EVIDENCE,

22 HAVE MET THAT STANDARD.

23 IF THERE ARE OTHER SPECIFIC MATTERS WHICH

24 THE COURT WOULD LIKE TO HEAR, I'D BE MORE THAN WILLING;

25 BUT OTHERWISE, I'M GOING TO SUBMIT.

26 THE COURT: NO, I DON'T THINK SO.

27 MR. STEIN: I'D LIKE TO REPLY TO ONE STATEMENT.

28 THE COURT: ALL RIGHT.

49

1 MR. STEIN: ACTUALLY, ONE -- TWO STATEMENTS.

2 NUMBER ONE, I UNDERSTAND IT'S REASONABLE

3 PROBABILITY OF SUCCESS ON THE MERITS THAT'S THE

4 STANDARD, BUT THE EVIDENTIARY STANDARD WITHIN THAT

5 INJUNCTION STANDARD IS CLEAR AND CONVINCING EVIDENCE,

6 UNDER RULE 5.103, WITH REGARD TO THE STATE BAR.

7 NUMBER TWO, EVIDENTIARILY, WITH REGARD TO

8 THE 300 --

9 THE COURT: WAIT. WITH REGARD TO THE STATE BAR?

10 MR. STEIN: YES. THE STATE BAR HAS TO PROVE ANY

11 CASE AGAINST A LAWYER, WHETHER IT'S THROUGH THE PEOPLE

12 OR THE STATE BAR, BY CLEAR AND CONVINCING EVIDENCE,

13 UNDER RULE 5.103, WHETHER THEY'RE OPERATING IN A COURT

14 OF LAW, IN THE STATE BAR COURT, OR THE SUPREME COURT.

15 CLEAR AND CONVINCING EVIDENCE.

16 AND THEN THEY HAVE TO PROVE A REASONABLE

17 PROBABILITY OF SUCCESS ON THE MERITS BY CLEAR AND

18 CONVINCING EVIDENCE. THAT'S AT LEAST WHAT I CLAIM.

19 RULE 5.103.

20 NUMBER TWO, YOUR HONOR -- AND THIS IS -- AND

21 THEN I'M DONE. WITH RESPECT TO THE 350 PEOPLE, THAT EX

22 PARTE NOTICE, FIRST OF ALL, WAS ISSUED BY ERIKSON DAVIS,

23 NOT BY ME, ON BEHALF OF THE LAW FIRM.

24 AND ALL OF THE ARGUMENTS REGARDING THOSE

25 PEOPLE WERE MADE IN FRONT OF JUDGE HIGHBERGER, AND HE

26 GRANTED THE AMENDMENT AS TO THOSE PEOPLE. NONE OF THOSE

27 PEOPLE, ZERO OF THEM, PAID MITCHELL J. STEIN, MITCHELL

28 J. STEIN & ASSOCIATES, OR ERIKSON DAVIS ONE PENNY FOR

50

1 THE REPRESENTATION. AND THEY ARE NOW A PART OF THAT

2 CASE. JUDGE HIGHBERGER GRANTED --

3 THE COURT: THESE PEOPLE WERE ALL SOLICITED,

4 WEREN'T THEY?

5 MR. STEIN: NO.

6 THE COURT: OH, THEY CAME TO YOU. ALL 300 CAME TO

7 YOU DIRECTLY.

8 MR. STEIN: FIRST OF ALL, THE AMENDMENT WAS FOR

9 160, NUMBER ONE, NOT 360.

10 THE COURT: I'M JUST ASKING YOU. ANSWER THE

11 QUESTION I ASKED: THEY ALL CAME TO YOU DIRECTLY, ALL

12 300?

13 MR. STEIN: THE 160 THAT WE REPRESENT CAME TO US

14 DIRECTLY, THE 160, AND SIGNED RETAINER AGREEMENTS WITH

15 OUR FIRM DIRECTLY. AND I NEVER SAID ON FEBRUARY 3RD, IN

16 FRONT OF JUDGE --

17 THE COURT: WHAT HAPPENED TO THE 349?

18 MR. STEIN: I HAVE -- ACCORDING TO MR. TOMA, THEY

19 WERE ADDED TO ANOTHER CASE BY MR. KRAMER, WHICH MAY BE

20 TRUE. I DON'T KNOW. I DON'T KNOW WHAT HAPPENED TO

21 THEM. I DON'T KNOW THEM. I KNOW THE 160 THAT WE ADDED;

22 THAT WE SIGNED RETAINER AGREEMENTS WITH EACH CLIENT;

23 THAT WE INTERVIEWED EACH CLIENT; AND THAT --

24 AND ALL OF THE ARGUMENTS WERE MADE BY JUDGE

25 HIGHBERGER. AND ON AUGUST 1ST, HE GRANTED EX PARTE

26 THEIR INCLUSION INTO THE CASE. AND THEY DID NOT TELL

27 JUDGE FRANK JOHNSON THAT THAT HAPPENED WHEN THEY MADE

28 THE EX PARTE APPLICATION.

51

1 THOSE ARE JUST FACTS. THE COURT MAY VIEW

2 THOSE FACTS AS NOT WEIGHTY, BUT I'M JUST -- THAT'S MY

3 RESPONSE TO WHAT HE'S SAYING.

4 NUMBER TWO, YOUR HONOR, COUNSEL SAID THAT ON

5 FEBRUARY 3RD I TOLD JUDGE HIGHBERGER I HAD NO

6 RELATIONSHIP WITH PHIL KRAMER. THAT'S ABSOLUTELY NOT

7 TRUE. WE HAD FIVE CASES ON FILE, AS OF DECEMBER 30TH.

8 I TOLD -- I SPECIFICALLY TOLD HIM THAT.

9 AND WE THOSE CASES WERE RELATED BY JUDGE

10 HIGHBERGER. WE APPEARED IN THE SAME COURTROOM TOGETHER.

11 WE WERE OBVIOUSLY TALKING ABOUT HOW TO PROTECT PEOPLE'S

12 HOMES WITH REGARD TO THOSE FIVE CASES.

13 THEY'RE SEQUENTIALLY NUMBERED CASES, SO

14 JUDGE HIGHBERGER KNEW ABOUT THE CASES. THEY WERE FILED

15 ON DECEMBER 30TH. THE HEARING MR. TOMA IS REFERRING TO,

16 I BELIEVE, IS FEBRUARY 3RD.

17 SO THERE'S ONE THING TO -- AND WE ONLY

18 REPRESENTED, IN TWO OF THESE CASES, 20 OF THOSE

19 PLAINTIFFS BECAUSE IT WAS REQUIRED TO REPRESENT ALL OF

20 THEM PRO BONO, ONCE WE INTERVIEWED THEM, BECAUSE THEY

21 WERE ALL HARDSHIP CASES.

22 AND I HAVE NOTHING ELSE. I HAVE NO OTHER

23 REPLIES, YOUR HONOR.

24 THE COURT: OKAY. THANK YOU.

25 MR. TOMA: JUST FOR CLARIFICATION.

26 I THINK THE RECORD WILL SPEAK FOR ITSELF,

27 BUT I BELIEVE WHAT THE RECORD STATES ON THE FEBRUARY 3RD

28 HEARING WAS, JUDGE HIGHBERGER ASKED MR. STEIN, "IS MR.

52

1 KRAMER AUTHORIZED TO SAY THAT HE WORKS WITH YOU IN THESE

2 ENDEAVORS?"

3 AND MR. STEIN SAID, "NO, HE IS NOT

4 AUTHORIZED TO SAY SO."

5 THE COURT: ALL RIGHT. WELL, I HAVE NOT HEARD

6 ANYTHING THAT WOULD CHANGE MY MIND WITH RESPECT TO THE

7 TENTATIVE RULING ON THE PRELIMINARY INJUNCTION.

8 WHILE I DIDN'T QUOTE ALL THE EVIDENCE IN THE

9 TENTATIVE, IT'S AN 18-PAGE TENTATIVE. IT PROBABLY WOULD

10 HAVE BEEN A 65-PAGE TENTATIVE HAD I QUOTED ALL OF THE

11 EVIDENCE.

12 I CONCLUDED THAT THE EVIDENCE WAS

13 OVERWHELMING THAT MR. STEIN WAS INVOLVED IN THIS SCHEME,

14 AND I'M GRANTING THE PRELIMINARY INJUNCTION.

15 NOW, LET'S MOVE ON TO THE FREEZE ORDER. DO

16 WE NEED TO DO THAT NEXT, OR SHOULD WE MOVE ON TO THE

17 ASSUMPTION OF JURISDICTION?

18 MR. TOMA: YOUR HONOR, THANK YOU.

19 THE PRELIMINARY INJUNCTION CONTAINS THE

20 ASSET FREEZE ORDER. THERE'S A SEPARATE ORDER JUST

21 CONFIRMING THE APPOINTMENT OF THE RECEIVER THAT WE HAVE

22 ALSO SUBMITTED TO THE COURT.

23 THE COURT: SO YOU JUST WANT ME TO SIGN THOSE.

24 MR. TOMA: THERE'S TWO SEPARATE ORDERS, YES, YOUR

25 HONOR.

26 THE COURT: SOMEPLACE OR OTHER I HAVE THESE.

27 MR. TOMA: YES, YOUR HONOR.

28 THE COURT: BUT THERE'S NO OSC WITH RESPECT TO

53

1 THAT?

2 MR. TOMA: THE OSC THAT WAS SCHEDULED WAS WITH

3 RESPECT TO BOTH THE PRELIMINARY INJUNCTION AND ASSET

4 FREEZE ORDER AND AN ORDER CONFIRMING THE APPOINTMENT OF

5 THE RECEIVER.

6 THE COURT: OKAY. NOW, WHAT ABOUT MR. STEIN'S

7 STATEMENTS WITH RESPECT TO WHAT HAPPENED YESTERDAY IN

8 THE FLORIDA COURT -- WHICH I HAVE NO EVIDENCE OF; BUT

9 ANYWAY, WHAT ABOUT THAT?

10 MR. TOMA: YOUR HONOR, YESTERDAY THERE WAS A

11 HEARING ON -- IN THE BANKRUPTCY COURT IN FLORIDA WITH

12 RESPECT TO DEFENDANTS, INCLUDING THE PEOPLE'S MOTION TO

13 DISMISS THE COMPLAINT. THAT MOTION WAS GRANTED.

14 TO THE EXTENT THAT THERE WAS AN ISSUE WITH

15 RESPECT TO --

16 THE COURT: MOTION TO DISMISS THE COMPLAINT IN

17 BANKRUPTCY?

18 MR. TOMA: YES, YES.

19 MR. STEIN: WITH OR WITHOUT LEAVE TO AMEND?

20 MR. TOMA: YES. THE PLAINTIFFS --

21 MR. STEIN: NO ANSWER.

22 MR. TOMA: -- WILL BE REQUIRED TO FILE AN AMENDED

23 COMPLAINT, I BELIEVE, WITHIN FIVE DAYS, IN WHICH CASE WE

24 WOULD EXPECT THAT WE WOULD FILE ANOTHER MOTION TO

25 DISMISS AT THAT POINT.

26 THE COURT: OH, OKAY. YOU MEAN, THE ADVERSARY

27 COMPLAINT?

28 MR. TOMA: YES, THE ADVERSARY COMPLAINT IN THE

54

1 BANKRUPTCY COURT IN FLORIDA.

2 THE COURT: OKAY.

3 MR. STEIN: MAY I CLARIFY WHAT I THINK HAPPENED

4 YESTERDAY? AND WE CAN GET -- I MEAN, I'LL HAVE A

5 TRANSCRIPT TONIGHT, SO I CAN SUBMIT IT TO THE --

6 THE COURT: WERE YOU THERE?

7 MR. STEIN: EXCUSE ME?

8 THE COURT: WERE YOU THERE?

9 MR. STEIN: NO, I WAS NOT THERE.

10 THE COURT: OKAY.

11 MR. STEIN: AND NEITHER WAS MR. TOMA.

12 THE COURT: NO, I KNOW, BUT WHAT HAPPENED WAS,

13 THERE WAS A MOTION TO DISMISS THE ADVERSARY COMPLAINT.

14 THAT WAS GRANTED WITH LEAVE TO AMEND.

15 MR. STEIN: THAT'S CORRECT. AND THERE WAS

16 ANOTHER -- THERE WAS SOMETHING ELSE THAT OCCURRED, AS

17 WELL, YOUR HONOR, AND THAT WAS THAT THE COURT STATED

18 THAT ANY FREEZING OF DEBTOR-IN-POSSESSION ACCOUNTS MUST

19 BE APPROVED BY THE BANKRUPTCY COURT.

20 AND I'M MORE THAN HAPPY TO PROVIDE THE COURT

21 WITH A TRANSCRIPT OF THAT.

22 THE COURT: OKAY. BUT I THINK THE ONLY THING THAT

23 IS AT ISSUE, AND IT IS AT ISSUE WITH RESPECT TO YOUR EX

24 PARTE, ARE THE ACCOUNTS THAT THE BANKRUPTCY COURT HAS

25 ALREADY LOOKED AT.

26 MR. STEIN: NO, THAT'S NOT WHAT THE BANKRUPTCY

27 COURT RULED. BUT I'LL -- AS I SAID, WHEN I HAVE -- WHEN

28 I GET THE TRANSCRIPTS --

55

1 THE COURT: NO, I'M NOT TALKING ABOUT YESTERDAY.

2 I'M TALKING ABOUT BEFORE. THOSE BANK ACCOUNTS WERE

3 ALREADY BEFORE THE BANKRUPTCY COURT, IT'S MY

4 UNDERSTANDING.

5 MR. STEIN: THEY WERE. AND THAT WAS ON AUGUST 20,

6 2011. AND THAT COURT WAS PRESENTED WITH NEW EVIDENCE

7 AND MADE A DIFFERENT RULING YESTERDAY REGARDING THOSE

8 PERSONAL ACCOUNTS THAT HAVE BEEN -- DIP ACCOUNTS THAT

9 HAVE BEEN FROZEN.

10 AND THE BANKRUPTCY COURT'S RULING IS WHAT IT

11 IS. IT SAYS WHAT IT SAYS. AND YOU'RE RIGHT, I

12 WASN'T -- THE COURT IS CORRECT, I WASN'T THERE; BUT I'M

13 POSITIVE THAT THAT'S WHAT WAS SAID. I GOT AN EMAIL FROM

14 THE RECEIVER --

15 THE COURT: LET ME PUT IT THIS WAY: I WOULD

16 CONSIDER SOMETHING IN THE FUTURE, BUT NOT TODAY. FOR

17 ME, THERE IS NO EVIDENCE BEFORE ME TODAY AS TO WHAT

18 HAPPENED IN THE BANKRUPTCY COURT.

19 MR. STEIN: WELL --

20 MR. BENJAMIN: YOUR HONOR, COULD I ADDRESS ONE

21 MATTER ON BEHALF OF THE RECEIVER, WHICH IS, WHAT

22 ACTUALLY OCCURRED IS THAT MR. STEIN SENT AN EMAIL TO THE

23 RECEIVER -- AMONG OTHER PEOPLE -- YESTERDAY, THREATENING

24 TO BRING A LAWSUIT AGAINST THE RECEIVER IF THE RECEIVER

25 DID NOT IMMEDIATELY RELEASE THOSE ACCOUNTS. HE

26 THREATENED TO DO SO AT 12:15 TOMORROW.

27 WE THEN REQUESTED A COPY OF THE ORDER WHICH

28 HE CLAIMED EXISTED, STATING THOSE ACCOUNTS HAD TO BE

56

1 UNFROZEN. AND HE ACTUALLY STATED THAT THE MOTION TO

2 DISMISS HAD BEEN DENIED, AS WELL. WHEN THAT REQUEST WAS

3 MADE OF MR. STEIN, HE REPEATED HIS REQUEST TO FILE SUIT

4 AGAINST THE RECEIVER.

5 SO PRESENTLY, ALTHOUGH, OBVIOUSLY, THE

6 RECEIVER WILL CONSIDER A LAWFUL ORDER THAT'S ISSUED --

7 WE WANT TO COMPLY WITH ORDERS -- WE BELIEVE MR. STEIN IS

8 IN VIOLATION OF THE STAY OF ACTIONS IN THE ORDER

9 APPOINTING THE RECEIVER, WHICH SPECIFICALLY PROHIBITS

10 BOTH FILING SUITS AGAINST THE RECEIVER AND HARASSING THE

11 RECEIVER TO RECEIVE ASSETS, PARTICULARLY --

12 THERE'S ABOUT $30,000 FROZEN IN THOSE

13 ACCOUNTS, AND MR. STEIN IS THREATENING A LAWSUIT AGAINST

14 THE RECEIVER AT 12:00 NOON TOMORROW, WITHOUT PROVIDING

15 US WITH THOSE ORDERS, IF WE DON'T GIVE HIM THAT $30,000.

16 OBVIOUSLY, WE'RE NOT GOING TO DO IT WITHOUT

17 EVIDENCE THAT, IN FACT, THE BANKRUPTCY COURT HAS SO

18 DIRECTED; BUT IT'S CERTAINLY OF GREAT CONCERN TO THE

19 RECEIVERSHIP, THESE THREATS BEING MADE BY MR. STEIN.

20 MR. STEIN: YOUR HONOR, IF THIS COURT WANTS TO

21 MAKE AN ORDER THAT I CAN'T FILE A LAWSUIT, IT WOULD BE

22 LOVELY.

23 THE COURT: THERE'S ALREADY ORDER IN PLACE.

24 MR. STEIN: THERE IS NO SUCH ORDER. IT IS MY

25 POSITION THERE IS NO SUCH ORDER, AND SUCH AN ORDER WOULD

26 BE UNCONSTITUTIONAL, TO BAR SOMEONE FROM SUING FOR

27 UNLAWFUL CONDUCT.

28 THE COURT: DIDN'T YOU LISTEN TO WHAT THE ATTORNEY

57

1 FOR THE RECEIVER HAD TO SAY?

2 MR. STEIN: YES. I THINK HE SAID --

3 THE COURT: IF YOU HAVE SUCH AN ORDER, GIVE IT TO

4 THEM. IF YOU HAVE SUCH AN ORDER BY THE BANKRUPTCY

5 COURT --

6 MR. STEIN: NO, WHAT -- I WAS RESPONDING TO THE

7 RECEIVER'S STATEMENT THAT I AM BARRED FROM SUING THE

8 RECEIVER FOR VIOLATING A COURT ORDER, NOT THAT -- NOT

9 WHAT THE ORDER SAID YESTERDAY. AND I DON'T BELIEVE I'M

10 BARRED FROM SUING ANYONE FOR AN UNLAWFUL ACT. I BELIEVE

11 SUCH AN ORDER WOULD BE UNCONSTITUTIONAL ON ITS FACE.

12 THE COURT: OKAY. WHAT COURT ORDER?

13 MR. STEIN: THE COURT ORDER THAT I BELIEVE WAS

14 ISSUED YESTERDAY BY THE BANKRUPTCY COURT. AND THE

15 RECEIVER'S RESPONSE TO ME WAS VERY REASONABLE. THE

16 RECEIVER SAID, "I WILL STUDY THE ORDER, AND WE'LL TALK

17 ABOUT IT."

18 THE COURT: FINE. DONE. DONE. THEY DON'T HAVE

19 IT YET.

20 MR. STEIN: NOBODY HAS IT.

21 THE COURT: RIGHT.

22 MR. STEIN: THAT'S CORRECT.

23 THE COURT: RIGHT. AND IT'S CERTAINLY NOT BEFORE

24 ME. SO AS FAR AS I'M CONCERNED, IT'S STATUS QUO. OKAY?

25 ALL RIGHT.

26 NOW, LET'S MOVE ON, THEN, TO THE ASSUMPTION

27 OF JURISDICTION OVER THE LAW PRACTICE.

28 MR. STEIN: YOUR HONOR, SINCE THE TENTATIVE IS

58

1 AGAINST ME, I PRESUME THE COURT WANTS ME TO MAKE THE

2 ARGUMENT.

3 THE COURT: WELL, UNLESS --

4 MR. STEIN: BECAUSE THE --

5 THE COURT: JUST A MINUTE. I JUST WANT TO --

6 BECAUSE YOU'RE NOT REALLY THE MOVING PARTY.

7 I SHOULD FIND OUT WHETHER OR NOT THE STATE

8 BAR SUBMITS ON THE TENTATIVE.

9 MS. LEECE: YES, WE SUBMIT ON THE TENTATIVE, YOUR

10 HONOR.

11 THE COURT: ALL RIGHT. THANK YOU.

12 MR. STEIN: YOUR HONOR, MOST OF THIS OVERLAPS WITH

13 THE PRELIMINARY INJUNCTION, SO HOPEFULLY, MY BREVITY

14 WILL BE SOMEWHAT APPRECIATED BY THE COURT ON THIS ISSUE.

15 THE COURT: THANK YOU.

16 MR. STEIN: NUMBER ONE, 5.103 REQUIRES CLEAR AND

17 CONVINCING EVIDENCE. I'VE MADE THE ARGUMENT BEFORE.

18 I'M MAKING IT AGAIN.

19 SECTION 6180.14 REQUIRES THAT IF THERE IS A

20 PARTNERSHIP, THAT A FINDING BE MADE THAT ALL THE

21 PARTNERS ARE INCOMPETENT. MR. DAVIS WAS INDISPUTABLY,

22 FROM THE PUBLIC RECORDS, A MEMBER OF THE PARTNERSHIP ON

23 THE DATE OF THE RAID.

24 THE PARTNERSHIP -- THIS COURT INDICATES

25 THERE'S NO EVIDENCE THAT IT WAS FORMED. AND YOUR

26 HONOR -- I DON'T WANT TO WALK IN THERE; BUT I REALLY,

27 FRANKLY, IN 25 YEARS, HAVE NEVER SEEN ANYTHING LIKE

28 THIS. I'M HOLDING UP -- AND FOR THE RECORD, A

59

1 CERTIFICATE OF REGISTRATION BY THE CALIFORNIA STATE BAR

2 THAT SAYS:

3 "THE STATE BAR OF CALIFORNIA CERTIFIES

4 THAT HAVING COMPLIED" --

5 THE COURT: WHO ARE YOU HOLDING THAT UP FOR?

6 MR. STEIN: I'M HOLDING IT UP FOR THE COURT.

7 THE COURT: GOOD. THEN FACE IT TO THE COURT.

8 THANK YOU.

9 MR. STEIN: IT CERTIFIES THAT HAVING --

10 I JUST DON'T KNOW IF YOU'RE NEARSIGHTED,

11 LIKE ME, BECAUSE I CAN'T SEE FAR.

12 THE COURT: IT WOULDN'T HELP ME, IF YOU'RE FACING

13 IT IN THAT DIRECTION, WHETHER I'M NEARSIGHTED OR

14 FARSIGHTED.

15 MR. STEIN: (READING:)

16 "... CERTIFIES THAT, HAVING COMPLIED

17 WITH THE REQUIREMENTS OF THE STATUTES OF THE

18 STATE OF CALIFORNIA AND APPLICABLE RULES AND

19 REGULATIONS PERTAINING TO LIMITED LIABILITY

20 PARTNERSHIPS, MITCHELL J. STEIN & ASSOCIATES,

21 LLP, IS REGISTERED AS A LIMITED LIABILITY

22 PARTNERSHIP."

23 SIGNED BY JOSEPH L. DUNN, EXECUTIVE

24 DIRECTOR. CERTIFICATE NO. 54393, MAY 2, 2011.

25 THE COURT: OKAY.

26 MR. STEIN: THIS COURT'S FINDING THAT THERE IS NO

27 EVIDENCE, ADMISSIBLE EVIDENCE, THAT THE RECEIVER -- THAT

28 THE CERTIFICATE OF PARTNERSHIP IS VALID OR THAT THE LLP

60

1 IS ACTUALLY IN FORMATION IS -- THE ENTIRE ASSUMPTION OF

2 JURISDICTION TURNS ON THAT ISSUE. BECAUSE I THINK THIS

3 COURT WOULD AGREE THAT UNDER 6180.14, IF THE PARTNERSHIP

4 EXISTED, THEN THEY'VE GOT TO GO GET A FINDING OF

5 INCOMPETENCE AS TO ALL THE PARTNERS.

6 THE COURT: NO, I DON'T THINK SO. BUT I HAD

7 SEVERAL REASONS IN THERE, IN THE TENTATIVE. SO I DO NOT

8 THINK SO.

9 MR. STEIN: OKAY. WELL, IF 6180.14 IS NOT

10 DISPOSITIVE, THEN I WILL GO ON TO THE REMAINDER OF THE

11 ARGUMENTS; BUT I THINK THERE IS CLEAR AND CONVINCING

12 EVIDENCE THAT THE PARTNERSHIP EXISTED, UNLESS SOMEBODY

13 THINKS JAMES DUNN FORGED THE SIGNATURE OR THE COURT

14 CAN'T --

15 THE COURT: OKAY. BUT MR. STEIN, YOU'RE A TRIAL

16 LAWYER, AND YOU'RE A GOOD TRIAL LAWYER. YOU KNOW WHAT

17 ADMISSIBLE EVIDENCE IS, DON'T YOU?

18 MR. STEIN: ABSOLUTELY. AND I KNOW THAT UNDER --

19 THE COURT: AND FOR YOU TO SUBMIT SOMETHING LIKE

20 THAT, IT SHOULD BE A CERTIFIED COPY, SHOULDN'T IT,

21 NUMBER ONE.

22 AND NUMBER TWO, I WOULD EXPECT, IF YOU WERE

23 GOING TO PROVE TO THIS COURT THAT YOU WERE A LIMITED

24 LIABILITY COMPANY, YOU WOULD SUBMIT TO THIS COURT YOUR

25 ARTICLES AND SHOW THAT YOU ACTUALLY FORMED THAT LIMITED

26 LIABILITY PARTNERSHIP THROUGH THE DEPARTMENT OF

27 CORPORATIONS. AND YOU DIDN'T DO THAT. I WOULD EXPECT

28 THAT YOU WOULD DO THAT.

61

1 BUT ANYWAY --

2 MR. STEIN: YOUR HONOR --

3 THE COURT: -- THAT IS REALLY SORT OF BESIDE THE

4 POINT BECAUSE IT'S KIND OF A DISTRACTION HERE.

5 BUT GO AHEAD.

6 MR. STEIN: RIGHT. IF THE COURT'S POSITION IS

7 THAT ONE LAWYER INSIDE OF A PARTNERSHIP CAN HAVE -- CAN

8 HAVE HIS FILES TAKEN OUT OF THE PARTNERSHIP AND HAVE HIS

9 LAW PRACTICE, AS AN INDIVIDUAL WITHIN THE PARTNERSHIP,

10 TAKEN, IN A COURT OF LAW AS OPPOSED TO IN THE STATE BAR

11 COURT, IT IS ACADEMIC WHETHER OR NOT THE LLP EXISTS. SO

12 I'LL --

13 THE COURT: BUT I DID EXPLAIN TO YOU THAT IF THERE

14 IS -- IF THERE ARE PARTNERS -- IF THERE ARE PARTNERS

15 THAT ARE ADEQUATE TO TAKE OVER THE CLIENTS AND CONTINUE,

16 THEN THAT'S ANOTHER QUESTION. THAT'S CERTAINLY A

17 QUESTION THAT CAN BE TAKEN UP WITH THE STATE BAR.

18 BUT AS OF NOW, THERE AREN'T ANY SUCH PERSONS

19 BECAUSE YOUR ONLY OTHER PARTNER IS SOMEONE WHO IS ONLY

20 LICENSED TO PRACTICE IN FLORIDA.

21 MR. STEIN: YOUR HONOR, AS OF THE DATE OF THE

22 RAID, THE PARTNERSHIP HAD CALIFORNIA COUNSEL THAT WAS

23 ABLE TO TAKE OVER FOR THE PARTNERSHIP, A.

24 B, I AM NOT -- I AM NOT -- I HAVE NOT BEEN

25 ORDERED TO NOT PRACTICE LAW. ACCORDINGLY, ON BEHALF

26 OF -- AS THE STATE BAR -- AND I'LL READ THE LANGUAGE

27 FROM THE STATE BAR'S BRIEF. IN BEHALF OF ANY LLP -- IN

28 THE WORDS OF THE STATE BAR, NOT MY WORDS -- I WILL

62

1 PRACTICE LAW, AND CONTINUE ON BEHALF OF AN LLP TO

2 PRACTICE LAW, AND PROTECT CLIENTS UNTIL THE STATE BAR

3 COURT BRINGS A -- HAS ONE CLIENT COMPLAINT, BECAUSE I

4 DON'T HAVE ONE; BRINGS A DISCIPLINARY ACTION AGAINST ME.

5 IF THIS COURT WISHES TO ENJOIN ME FROM

6 PRACTICING LAW, WHICH WOULD BE THE ONLY WAY THAT I WOULD

7 STOP, THEN WE CAN ADDRESS THAT, AND THEN WE CAN FIND OUT

8 WHETHER OR NOT THAT'S LAWFUL UNDER SECTION 6190 AND

9 6180.

10 THE ISSUE OF THE LAW PRACTICE AS DEFINED AS

11 A PARTNERSHIP IS CRITICAL. AND THIS COURT'S FINDING

12 THAT -- WELL, THERE'S NO REASON TO GO OVER IT AGAIN,

13 GIVEN THAT, AS THE COURT HAS SAID, IT'S ACADEMIC.

14 I'VE ALREADY TALKED ABOUT THE PAUL HASTINGS

15 EXAMPLE, SO THAT'S ACADEMIC.

16 THE COURT HAS CORRECTLY INDICATED, WITH PAUL

17 HASTINGS, THEY WOULD HAVE ANOTHER LAWYER TO TAKE OVER.

18 I'VE INDICATED THE PARTNERSHIP DID HAVE ANOTHER LAWYER

19 TO TAKE OVER, MR. DAVIS.

20 GIVEN THAT THE STATE BAR TOLD ALL OF THE

21 CLIENTS -- AND IT'S UNDISPUTED, I THINK, THAT JUDGE

22 FRANK JOHNSON DID NOT KNOW ABOUT THE ALLEGED EXISTENCE

23 OF AN LLP ON AUGUST 15TH -- THE ALLEGED EXISTENCE. I

24 THINK THAT'S UNDISPUTED. AND I DON'T HEAR ANYONE

25 DISAGREEING WITH ME.

26 I THINK THAT IT WAS INCUMBENT, AS A MEMBER

27 OF THE BAR, ON MYSELF AND MR. DAVIS TO FORM SUCH A

28 STRUCTURE TO PROTECT THE CLIENTS FROM FORECLOSURE. WE

63

1 WERE ABLE TO DO THAT WITH ALL CLIENTS BUT ONE, A

2 MINNESOTA GENTLEMAN FROM BUFFALO, MINNESOTA, WHO HAD HIS

3 ORIGINAL TRIPLICATE -- THREE PROMISSORY NOTES SITTING IN

4 THE PAPER FILES OF THE OFFICE, THREE ORIGINAL NOTES WITH

5 FORGED SIGNATURES FROM BANK OF AMERICA.

6 AND THOSE FILES WERE TAKEN. AND THAT'S NOT

7 EVIDENCE; I'M NOT SUBMITTING IT AS EVIDENCE. I'M

8 STATING IT FOR THE RECORD, OF WHAT HAPPENED. THAT WAS

9 THE ONLY PERSON THAT WE COULD NOT PROTECT THAT -- IN

10 THAT FAST OF A MANNER.

11 HOWEVER, WE HAVE PROTECTED EVERYONE ELSE.

12 AND MR. DAVIS'S DECISION TO GO BACK INTO THE SOLE

13 PRACTITIONERSHIP OF LAW UNTIL THIS DISPUTE WAS RESOLVED

14 WAS IN FURTHERANCE OF PROTECTING THE CLIENTS, WHICH IS

15 WHAT THE STATUTE WAS DRAFTED FOR.

16 IT WAS NOT DRAFTED TO GO INTO PAUL HASTINGS,

17 TAKE ONE LAWYER OUT, AND FIND OUT WHO -- AND GO INTO THE

18 FILE ROOM AND TAKE 80 FILES AND FIND OUT WHO IS THERE TO

19 PROTECT THE CLIENTS.

20 THAT'S WHAT WE'VE DONE. THAT'S WHAT I'LL

21 CONTINUE TO DO. UNDER THE CURRENT COURT ORDERS, I'M NOT

22 PRECLUDED FROM PRACTICING LAW. AND THE STATE BAR SAID,

23 "HE CAN PRACTICE LAW FOR ANY LLP THAT HE'S A MEMBER OF."

24 AND THE COURT HAS SAID THAT THAT LLP DOESN'T

25 EXIST. AND WE PAID FOR IT, SO WE'LL BE MAKING SOME

26 CALLS AFTER TODAY'S HEARING ABOUT GETTING OUR MONEY

27 BACK, BECAUSE IT'S NOT A HUNDRED DOLLARS.

28 THE COURT: I DIDN'T SAY IT DIDN'T EXIST.

64

1 MR. STEIN: OR IT MIGHT NOT.

2 THE COURT: I SAID THERE'S NO EVIDENCE IN FRONT OF

3 ME THAT IT DOES.

4 MR. STEIN: I THINK THE COURT ALSO INDICATED

5 SOMETHING VERY DISCONCERTING, THAT IT'S NOT ON THE

6 CALIFORNIA SECRETARY OF STATE PORTAL -- AND SHOWING THE

7 EXTENSIVE AMOUNT OF WORK THE COURT HAS DONE, AND NOW

8 SOMETHING VERY DISCONCERTING; BUT SOMETHING BESIDES THE

9 POINT, SO I'LL GO ON TO THE REST OF IT.

10 THE COURT: OKAY.

11 MR. STEIN: ALL OF THE -- ALL OF THE FACTS THAT I

12 MENTIONED IN THE PRELIMINARY INJUNCTION ARE APPLICABLE

13 TO THE ASSUMPTION OF JURISDICTION. THE ASSUMPTION OF

14 JURISDICTION FINDS THAT I'M NOT COMPETENT BECAUSE I HAVE

15 ENGAGED IN THIS SCHEME WITH THESE OTHER DEFENDANTS. AND

16 THE SCHEME IS UNLAWFUL, AND THEREFORE, I'M INCOMPETENT.

17 THE STATUTE 6180, YOUR HONOR, SAYS -- AND

18 IT'S VERY IMPORTANT, I THINK, THAT WE LOOK AT THE

19 STATUTE. IT SAYS:

20 "WHEN AN ATTORNEY ENGAGED IN LAW

21 PRACTICE IN THIS STATE DIES" -- I THINK I'M

22 ALIVE -- "RESIGNS" -- I HAVEN'T RESIGNED --

23 "BECOMES AN INACTIVE MEMBER OF THE BAR" --

24 WHICH I HADN'T DONE AS OF AUGUST 15TH -- "IS

25 DISBARRED" -- HASN'T HAPPENED; CAN ONLY HAPPEN

26 IN THE SUPREME COURT OR AS DELEGATED TO THE

27 STATE BAR COURT; CAN'T HAPPEN HERE -- "OR IS

28 SUSPENDED FROM THE ACTIVE PRACTICE OF LAW AND

65

1 IS REQUIRED BY THE ORDER OF SUSPENSION TO GIVE

2 NOTICE OF THIS SUSPENSION" -- THAT HASN'T

3 HAPPENED -- "NOTICE OF CESSATION OF THE LAW

4 PRACTICE SHALL BE GIVEN, AND THE COURTS OF

5 THIS STATE SHALL HAVE JURISDICTION, AS

6 PROVIDED IN THIS ARTICLE."

7 THAT'S 6180. I'M NOT DEAD, I'M NOT

8 INACTIVE, I HAVEN'T BEEN DISBARRED, AND I HAVEN'T BEEN

9 SUSPENDED.

10 I NEED SOMEONE TO EXPLAIN TO ME -- I'M

11 HOLDING 6180; I'M JUST READING IT FOR THE PLAIN WORDS OF

12 THE STATUTE -- WHAT UNDER THAT STATUTE PROVIDES THE

13 STATE BAR, PRESUMING THAT THE COURT HAS FOUND

14 OVERWHELMING EVIDENCE, ET CETERA, EVEN THOUGH ALL --

15 EVEN THOUGH THERE'S NO EVIDENCE OF ANY MONEY FLOWING TO

16 ME. I HAVE TO ACCEPT THAT FINDING.

17 THE COURT: OKAY, BUT LET ME JUST SAY TO YOU THAT

18 THE APPELLATE COURT HAS LOOKED AT THIS. THE APPELLATE

19 COURT HAS LOOKED AT THIS IN THIS CASE, WITH RESPECT TO

20 MR. KRAMER, AND FOUND THAT THAT STATUTE IS APPLICABLE TO

21 THIS SITUATION. AND IT'S A VERY BROAD APPLICATION, AND

22 THERE IS AN ORDER OF THE APPELLATE COURT TO THAT EFFECT.

23 SO I'M NOT GOING TO LOOK AT THAT ISSUE AGAIN

24 WITH RESPECT TO WHETHER OR NOT IT'S APPLICABLE.

25 MR. STEIN: THE ORDER OF THE APPELLATE COURT HAS

26 TO DEAL WITH THE FACTS AND CIRCUMSTANCES REGARDING THAT

27 CASE, AND WHAT THEY FOUND WAS A SOLE PRACTITIONERSHIP.

28 TO THE EXTENT THAT THE RULING IS THAT THERE'S AN

66

1 APPELLATE COURT RULING THAT CAN BE CITED WITH AUTHORITY

2 THAT 61 --

3 THE COURT: NO, IT'S THIS CASE. IT IS THE LAW OF

4 THE CASE IN THIS CASE, THIS CASE THAT WE'RE TALKING

5 ABOUT.

6 MR. STEIN: OKAY. AND IT'S MY POSITION THAT 6180

7 DOESN'T EVEN MENTION ANY OTHER GROUNDS FOR INCOMPETENCY

8 OTHER THAN DYING OR RESIGNING. BUT IF THE COURT IS OF

9 THE OPINION THAT THE LAW REGARDING AN APPEAL BY MR.

10 KRAMER APPLIES TO ME IN THIS CASE, AND THAT THE

11 DIFFERENCE OF THE FACTS IS NOT RELEVANT BECAUSE OF THAT

12 LAW, I UNDERSTAND, AND -- I UNDERSTAND, AND I WILL DEFER

13 THE ISSUE.

14 THE COURT: OKAY. I THINK THAT THERE ARE NO

15 DIFFERENT FACTS. THIS IS ALLEGED TO BE A SCHEME AMONG

16 ALL THE DEFENDANTS.

17 MR. STEIN: A SCHEME AMONG ALL DEFENDANTS WHERE IT

18 IS UNDISPUTED THAT SOME $5 MILLION WENT THROUGH THE

19 ACCOUNT OF PHIL KRAMER, AND IT'S UNDISPUTED THAT THE

20 STATE BAR CAN'T ALLEGE THAT ANY MONEY WENT THROUGH MY

21 ACCOUNT.

22 AND I DON'T WANT TO REVISIT THE PRELIMINARY

23 INJUNCTION BECAUSE IF THE COURT FINDS THAT TO BE NOT

24 PERSUASIVE, THEN IT'S NOT PERSUASIVE.

25 THE COURT: OKAY.

26 MR. STEIN: WITH RESPECT TO THE LACK OF

27 JURISDICTION, THE COURT'S FINDING IS, PRIMARILY, ON PAGE

28 3, THAT:

67

1 "STEIN HAS FAILED TO PRESENT ANY

2 ADMISSIBLE EVIDENCE THAT AN LLP WAS EVER

3 FORMED OR EVIDENCE THAT ANY MEMBER OF THE

4 CALIFORNIA BAR IS A MEMBER OF THE ALLEGED LLP.

5 AT BEST, STEIN SUBMITTED AN UNAUTHENTICATED

6 CERTIFICATE FROM THE CALIFORNIA STATE BAR

7 INDICATING THAT IT IS APPROVED LLP. THERE IS

8 NO EVIDENCE STEIN COMPLIED WITH THE CALIFORNIA

9 CORPORATIONS CODE, WHICH REQUIRES, IN ADDITION

10 TO A $70.00 FILING FEE" --

11 AND THEN AT THAT LISTS ALL OF THE -- ALL OF

12 THE DIFFERENT REQUIREMENTS.

13 IN THE EVENT THAT THE -- IN THE EVENT THAT

14 THE EXISTENCE OF AN LLP CHANGES THE OUTCOME, THEN I

15 THINK THE CORRECT APPROACH WOULD BE TO ORDER ME TO ORDER

16 ME TO GO TO THE SECRETARY OF STATE AND PROVIDE

17 ADMISSIBLE EVIDENCE THAT THE LLP EXISTS. AND AS OF

18 AUGUST 15TH, THE EVIDENCE IS UNDISPUTED AS TO WHO THE

19 PARTNERS WERE.

20 THIS IS A SERIOUS MATTER, INVOLVING A LOT OF

21 DIFFERENT CLIENTS.

22 THE COURT: OKAY.

23 MR. STEIN: I CAN GO PRACTICE FOR ANOTHER LLP AND

24 REPRESENT THE CLIENTS. THAT'S FINE. BUT THIS LLP WAS

25 FORMED, AND THIS IS WHO THE CLIENTS SIGNED WITH.

26 THE COURT: OKAY. I THINK I SAY, FINALLY AND MOST

27 IMPORTANTLY, I THINK THAT THE FACT THAT -- EVEN ASSUMING

28 THERE WAS AN LLP, THE CESSATION -- LET'S SEE. THE

68

1 ASSUMPTION OF JURISDICTION IS OVER YOUR PRACTICE, YOUR

2 INDIVIDUAL PRACTICE AND YOUR DBA'S.

3 MR. STEIN: I DON'T HAVE -- YOUR HONOR, IT'S

4 UNLAWFUL --

5 THE COURT: IF ANY.

6 MR. STEIN: IT IS UNLAWFUL IN CALIFORNIA TO HAVE

7 TWO SEPARATE PRACTICES OF LAW SIMULTANEOUSLY. WHEN I,

8 PURSUANT TO A FEDERAL COURT ORDER, WENT FROM AN

9 INDIVIDUAL TO AN LLP, I TRANSFERRED ALL ASSETS TO IT.

10 IF I WAS DEFRAUDED BY THE STATE OR IF THERE

11 WAS MUTUAL MISTAKE OR ANY OTHER EVENT -- I DON'T HAVE AN

12 INDIVIDUAL LAW PRACTICE. TAKING JURISDICTION OVER AN

13 INDIVIDUAL LAW PRACTICE, WHEN I TRANSFERRED EVERYTHING

14 TO AN LLP -- WE CAN MAKE THE ORDER, BUT THERE'S NOTHING

15 THERE.

16 HOWEVER, THIS THEN FLOWS OVER -- AND THE

17 COURT MAY DISAGREE WITH THAT; IT FLOWS OVER TO THE

18 FREEZING OF ACCOUNTS. THE RECEIVER HAS STATED THAT IT

19 DID NOT FREEZE ANY OF THE PERSONAL ACCOUNTS OF ME. AND

20 IT ALSO FROZE FIVE ACCOUNTS OF THE LLP, EVEN THOUGH THE

21 LLP DIDN'T EXIST. I DON'T KNOW HOW WELLS FARGO BANK

22 COULD HAVE FIVE ACCOUNTS THAT DON'T -- BUT IT IS WHAT IT

23 IS.

24 IF THE LLP DOESN'T EXIST, THERE SHOULDN'T BE

25 ANY FREEZE ON THOSE ACCOUNTS. I DON'T WANT THE MONEY

26 FROM THOSE ACCOUNTS. I WANT A BANK ACCOUNT TO DO

27 BUSINESS IN THE FUTURE ON. I DON'T CARE WHETHER IT'S A

28 PERSONAL BANK ACCOUNT OR AN LLP BANK ACCOUNT OR I GO TO

69

1 BANK OF AMERICA -- WELL, PROBABLY NOT A GOOD BANK, GIVEN

2 THAT I'M SUING THEM. I GO TO ANOTHER BANK AND OPEN A

3 NEW ACCOUNT.

4 RIGHT NOW, WITH THE FREEZE ORDER AND THE

5 DEROGATORY REMARKS, I CAN'T OPEN ANY ACCOUNT. AND THAT

6 WASN'T AN ORDER OF THIS COURT OR PREVIOUS JUDGE JOHNSON,

7 JUDGE FRANK JOHNSON, THAT I CAN'T OPEN ANY ACCOUNTS.

8 THAT'S JUST A REALITY OF THE ORDER.

9 I WOULD HAVE ABSOLUTELY NO PROBLEM WITH ANY

10 OF THIS BECAUSE I HAVE NO PROBLEM CALLING THESE

11 WITNESSES TO THE STAND, WHICH WILL HAPPEN IN THE STATE

12 BAR COURT -- AND MAY EVEN HAPPEN HERE, IF THERE'S A JURY

13 TRIAL; BUT THIS IS ALL EQUITABLE, SO IT PROBABLY

14 WOULDN'T HAPPEN. BUT IT WILL HAPPEN IN THE STATE BAR

15 COURT.

16 I WOULD HAVE ABSOLUTELY NO PROBLEM IF I

17 COULD JUST WALK IN AND OPEN AN ACCOUNT AND DO BUSINESS

18 FOR THESE CLIENTS, WHO WISH TO SAVE THEIR HOMES. I

19 CAN'T DO THAT BECAUSE, CONTRARY TO WHAT THE RECEIVER HAS

20 STATED --

21 AND I DON'T EVEN -- AND THE RECEIVER ONCE

22 TOLD ME THAT IT WASN'T THEIR FAULT, THAT THE BANK DID

23 THIS WITHOUT TALKING TO THEM.

24 THE BANK HAS TAKEN THE FREEZING OF THE ONE

25 ACCOUNT THAT WAS ORDERED BY JUDGE FRANK JOHNSON -- HE

26 ORDERED ONE ACCOUNT FROZEN. AND THEY JUST SAID, "WELL,

27 GIVEN THAT, WE'RE FREEZING EVERYTHING." I THINK THAT'S

28 WHAT HAPPENED. I DON'T KNOW. I JUST KNOW THAT ALL THE

70

1 ACCOUNTS WERE FROZEN.

2 I'M NOT LOOKING FOR MONEY OUT OF THE

3 ACCOUNTS. I'M LOOKING TO OPERATE AS A LAWYER, WHICH I

4 HAVE A FIDUCIARY DUTY TO DO, WHATEVER THE ORDER IS --

5 UNLESS THIS COURT INDEMNIFIES ME, WHICH I DON'T THINK IS

6 GOING TO HAPPEN.

7 SO RATHER THAN ARGUE ABOUT SOMETHING THAT

8 THE COURT HAS ALREADY THOUGHT THROUGH IN GREAT DETAIL

9 AND ISSUED A TENTATIVE ON, I WOULD LIKE THE RECEIVER TO

10 WORK WITH ME TO GET A BANK ACCOUNT OPENED FOR ME. IF I

11 VIOLATE THE INJUNCTION AGAIN, THE STATE CAN SUE ME

12 AGAIN. AND THIS TIME, IT WILL BE SOMEWHAT DIFFERENT.

13 BUT AS IT NOW STANDS, THE RECEIVER IS FINE

14 WITH HAVING ALL FIVE PERSONAL ACCOUNTS FROZEN --

15 FORGETTING WHAT THE BANKRUPTCY COURT

16 ORDERED. THEY'LL HAVE TO DEAL WITH THAT ORDER, AND I

17 WILL, AS WELL. I'VE TOLD THE COURT WHAT I THOUGHT THE

18 ORDER WAS.

19 -- AND THEY'VE FROZEN THE FIVE LLP ACCOUNTS,

20 EVEN THOUGH THE LLP -- THE LLP MAY OR MAY NOT -- IS NOT

21 ON THE SECRETARY OF STATE PORTAL.

22 I DON'T KNOW WHAT TO DO ABOUT THAT SITUATION

23 BECAUSE THE COURT ORDER ONLY HAD ONE ACCOUNT IN IT. THE

24 COURT ORDER ISSUED BY JUDGE FRANK JOHNSON ONLY HAD ONE

25 ACCOUNT.

26 THE COURT: ALL RIGHT. MR. BENJAMIN?

27 MR. BENJAMIN: YOUR HONOR, TO ADDRESS THE POINT

28 REGARDING THE ACCOUNTS, THE COURT ORDER FROZE ALL OF THE

71

1 DEFENDANTS' ACCOUNTS, INCLUDING THE ONES THAT WERE

2 KNOWN, WHICH WERE SPECIFICALLY LISTED; BUT IT FROZE THE

3 ACCOUNTS, WHETHER OR NOT THEY WERE SPECIFICALLY LISTED,

4 BECAUSE NOT ALL ACCOUNTS WERE NECESSARILY KNOWN. SO

5 THAT WAS THE SCOPE OF THE FREEZE. AND THEN THE RECEIVER

6 GAVE NOTICE TO THE KNOWN BANKS OF THE ORDER TO INSTITUTE

7 THE FREEZE. SO THAT'S WHAT OCCURRED.

8 THE RECEIVER IS APPOINTED OVER THE ASSETS OF

9 THE ATTORNEY DEFENDANTS NOT TAKEN INTO POSSESSION BY THE

10 STATE BAR, EXCEPT FOR ASSETS OR PERSONAL ITEMS THAT ARE

11 WORTH LESS THAN 2500 AND EXCEPT FOR THEIR HOMES. SO

12 THAT'S THE CURRENT ORDER.

13 WE WILL CARRY OUT WHATEVER ORDER THE COURT

14 DIRECTS US TO WITH REGARD TO THE ASSETS, BUT THE CURRENT

15 SCOPE DOESN'T SEEM TO CONTEMPLATE MR. STEIN OPENING NEW

16 ACCOUNTS WITH -- I'M NOT SURE WHAT FUNDS THOSE WOULD BE.

17 IT'S VERY HARD TO ADDRESS THIS HYPOTHETICAL

18 BECAUSE I DON'T KNOW WHERE THAT MONEY IS COMING FROM OR

19 ANY OF THE FACTS REGARDING IT; BUT I DON'T UNDERSTAND

20 THE ORDER, AS IT PRESENTLY EXISTS, TO CONTEMPLATE MR.

21 STEIN HAVING THESE NEW ACCOUNTS WITH SUBSTANTIAL FUNDS.

22 IF HE CAN MAKE A RELEVANT SHOWING TO THE

23 COURT, OBVIOUSLY, WE'RE GOING TO CARRY OUT WHATEVER

24 ORDER THE COURT GIVES US WITH REGARD TO MR. STEIN'S

25 ASSETS; AND SUBJECT TO WHAT ORDERS MAY EXIST FROM THE

26 BANKRUPTCY COURT, AS WELL.

27 THE COURT: OKAY. SO THAT'S REALLY NOT ON

28 CALENDAR FOR TODAY, IS IT? I MEAN, THE ONLY OTHER THING

72

1 ON CALENDAR IS THE EX PARTE WITH RESPECT TO THE

2 ACCOUNTS.

3 MR. STEIN: WELL, THERE'S -- IN THE TENTATIVE

4 RULING, WITH REGARD TO THE FREEZING OF MONEY, IT SAYS,

5 "THERE'S NO EVIDENCE" -- QUOTE, ON PAGE 1, NEW PARAGRAPH

6 3:

7 "THERE IS NO EVIDENCE, HOWEVER, THAT ANY

8 OF THE ACCOUNTS REFERENCED IN THE EX PARTE

9 REQUEST ARE THE PERSONAL PROPERTY OF DEFENDANT

10 STEIN," PERIOD.

11 BUT THERE IS EVIDENCE. THERE'S EVIDENCE

12 THAT FOUR OF THEM ARE THE PERSONAL PROPERTY. SO THE --

13 THAT'S NUMBER ONE.

14 NUMBER TWO, THE RECEIVER JUST SAID HE

15 DOESN'T UNDERSTAND HOW I CAN OPEN AN ACCOUNT. THERE IS

16 NO INJUNCTION PROHIBITING ME FROM PRACTICING LAW; IS

17 THAT CORRECT? OR INCORRECT?

18 THE COURT: I DON'T THINK THERE IS AN INJUNCTION.

19 MR. STEIN: OKAY. SO WHEN YOU PRACTICE LAW,

20 YOU -- I DO A LOT OF PRO BONO WORK, AND I HAVE DONE IT

21 FOR 25 YEARS, BUT YOU TEND TO GET PAID.

22 THE COURT: I HOPE SO.

23 MR. STEIN: SO IF THE RECEIVER IS SAYING TO THIS

24 COURT THAT I CAN'T OPEN UP AN ACCOUNT, I'M SAYING TO

25 THIS COURT, "I AM GOING TO OPEN UP AN ACCOUNT TOMORROW,

26 ONE WAY OR THE OTHER." I MEAN, I'M PRACTICING LAW.

27 SO THE RECEIVER IS SAYING THINGS THAT WOULD

28 BE AN ABSOLUTE OUTRAGE IF SAID TO A PANEL OF APPELLATE

73

1 JUSTICES. IT WOULD BE ABSOLUTE OUTRAGE. DISCIPLINE IS

2 RESERVED FOR THE CALIFORNIA SUPREME COURT, NOT FOR THIS

3 COURT AND NOT FOR THE PEOPLE.

4 AND THE RULING OF THE CALIFORNIA APPELLATE

5 COURT THAT THIS COURT IS REFERRING TO DOES NOT DISBAR

6 MR. KRAMER -- I GUESS, IS THE APPELLANT IN THAT CASE,

7 AND DOESN'T PURPORT TO DISBAR HIM. THE APPLICATION BY

8 THE PEOPLE DOESN'T DO THAT. IT IS LEFT TO THE SOUND

9 DISCRETION OF THE STATE BAR, AND THEY HAVE DELEGATED, AS

10 OF 1955, THAT DISCRETION TO THE STATE BAR COURT.

11 SO IF THE RECEIVER SAID THAT OR IMPLIED

12 THAT -- I'M TELLING THE COURT RIGHT NOW, SO IF THE COURT

13 WANTS ME TO ENJOIN ME, I WON'T DO IT -- I'M GOING TO

14 CONTINUE TO PRACTICE LAW. I'M GOING TO CONTINUE TO

15 PROTECT THESE PEOPLE.

16 AND I'M GOING TO PROBABLY GET PAID;

17 PARTICULARLY WHEN I WIN, AND THERE'S A CONTINGENCY

18 AWARD, I'M PROBABLY GOING TO GET PAID A LOT OF MONEY.

19 AND SINCE I DIDN'T RECEIVE ANY MONEY, THESE PEOPLE ARE

20 NEVER GOING TO GET AN ORDER OF RESTITUTION BECAUSE I

21 DIDN'T RECEIVE ANY BENEFITS FROM THIS.

22 BUT I'M GOING TO OPEN A BANK ACCOUNT AND

23 CONTINUE TO PRACTICE LAW. I'M NOT GOING TO ABANDON

24 CLIENTS. I APOLOGIZE FOR BEING SO FORWARD ABOUT IT, BUT

25 I CAN'T BELIEVE THE STATEMENT I JUST HEARD. I DON'T

26 THINK ANYONE IN THE COURTROOM CAN BELIEVE IT.

27 THE COURT: OKAY. WELL, LET'S JUST DEAL WITH THE

28 EX PARTE. THE EX PARTE -- IT'S MY UNDERSTANDING THAT

74

1 THE ISSUE WITH RESPECT TO THE BANK ACCOUNTS THAT ARE AT

2 ISSUE WITH RESPECT TO THIS EX PARTE WERE ALREADY

3 REVIEWED BY THE BANKRUPTCY COURT. AM I RIGHT?

4 MR. TOMA: THAT'S CORRECT, YOUR HONOR. MR. STEIN

5 MADE AN EMERGENCY MOTION BACK IN AUGUST, AND THERE WAS

6 NOTICE OF THESE FROZEN BANK ACCOUNTS.

7 NOW, WHETHER THERE'S STILL AN ISSUE OR MR.

8 STEIN PLANS TO BRING THIS ISSUE UP AGAIN IN THE

9 BANKRUPTCY COURT -- THAT IS A POSSIBILITY, BUT THAT IS

10 SOMETHING SEPARATE.

11 I BELIEVE THE ONLY MATTER THAT HE'S BRINGING

12 UP WITH RESPECT TO THIS COURT AND A PERCEIVED VIOLATION

13 OF THE SEPTEMBER 6TH ORDER BY JUDGE MEISINGER IS THAT HE

14 CLAIMS THAT THE PEOPLE ARE IN VIOLATION OF JUDGE

15 MEISINGER'S COURT ORDER, BUT THAT COURT ORDER ONLY

16 STATED AND WAS SET FORTH BY THE PEOPLE AS A

17 REPRESENTATION THAT WE WOULD DO NOTHING TO SEIZE

18 ANYTHING THAT HADN'T ALREADY BEEN DONE.

19 EVERYONE HAD NOTICE -- INCLUDING JUDGE

20 MEISINGER, INCLUDING MR. STEIN, INCLUDING THE BANKRUPTCY

21 COURT IN FLORIDA -- THAT THOSE ACCOUNTS HAD ALREADY BEEN

22 FROZEN.

23 SINCE THAT SEPTEMBER 6 ORDER, NEITHER THE

24 PEOPLE NOR, I BELIEVE, THE RECEIVER HAVE DONE ANYTHING

25 WITH RESPECT TO ATTEMPTING TO SEIZE ANY OF MR. STEIN'S

26 ASSETS OR PROPERTY OR HAVE FROZEN ANY OTHER ACCOUNTS,

27 OTHER THAN THE ONES THAT WERE PREVIOUSLY FROZEN.

28 THE COURT: AND DOESN'T INTEND TO DO SO.

75

1 MR. TOMA: AND DOES NOT INTEND TO DO SO, ABSENT

2 SOME COMFORT ORDER OR SOME STATEMENT THAT IT WOULD GET

3 FROM THE BANKRUPTCY COURT.

4 MR. STEIN: YOUR HONOR, AFTER THE LAST THING HE

5 JUST SAID, I HAVE NO DISAGREEMENT. I WAS ABOUT TO ADD

6 TO IT THAT JUDGE MEISINGER SAID NO ASSETS WILL BE TAKEN

7 WITHOUT FIRST OBTAINING AN APPROPRIATE ORDER FROM THE

8 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT

9 OF FLORIDA, WEST PALM BEACH DIVISION.

10 THE BANKRUPTCY COURT'S PROBLEM IS THAT

11 THERE'S A PLAN OF REORGANIZATION THAT WAS TWO YEARS IN

12 THE MAKING; $200 MILLION OF LIABILITY LITIGATED, AND

13 THERE'S A PLAN OF REORGANIZATION. THAT PLAN HAS TO BE

14 IMPLEMENTED THROUGH A BANK ACCOUNT SOMEWHERE.

15 SO AT THE TIME OF AUGUST 20, THERE WAS ONLY

16 CERTAIN BANK ACCOUNTS THAT WERE FROZEN. IT WAS UNCLEAR,

17 BECAUSE OF THE FACT THAT THE ORDER ONLY HAD ONE ACCOUNT

18 AND OF THE FACT THAT THE LLP WAS NOT NAMED -- AND IS

19 STILL NOT NAMED AS A DEFENDANT. AND I STILL DON'T HAVE

20 ANY EVIDENCE BEFORE ME, SINCE -- THAT THE LLP IS BEING

21 ENJOINED FROM DOING ANYTHING.

22 THE COURT: OKAY. ALL I'M SAYING IS THE

23 FOLLOWING, THAT THIS ISSUE WITH RESPECT TO -- I THINK

24 THERE ARE FOUR BANK ACCOUNTS THAT HAVE BEEN FROZEN?

25 MR. STEIN: TEN.

26 THE COURT: TEN BANK ACCOUNTS THAT HAVE BEEN

27 FROZEN?

28 MR. BENJAMIN: YOUR HONOR, IT'S IN OUR REPORT.

76

1 THERE'S ACTUALLY, I BELIEVE, FIVE IN THE NAME OF THE

2 DEBTOR-IN-POSSESSION, FIVE IN THE NAME OF THE LLP, AND

3 THERE'S A COUPLE OTHERS IN A COUPLE OTHER NAMES THAT ARE

4 RELATED TO MR. STEIN.

5 SO WE'RE CLOSER TO 15 TOTAL ACCOUNTS. A

6 NUMBER OF THEM HAVE ZERO BALANCES OR EVEN NEGATIVE

7 BALANCES. THERE'S ONLY ABOUT 30,000, TOTAL, IN ALL OF

8 THE ACCOUNTS.

9 THE COURT: OKAY. WELL, THEN, THERE WERE FIVE

10 THAT WERE PERSONAL ACCOUNTS?

11 MR. BENJAMIN: WERE DEBTOR-IN-POSSESSION ACCOUNTS,

12 I BELIEVE, YOUR HONOR.

13 THE COURT: DEBTOR-IN-POSSESSION ACCOUNTS. SO THE

14 BANKRUPTCY COURT HAS LOOKED AT THIS AND DID NOT ISSUE

15 ANY ORDER TO UNFREEZE THOSE ACCOUNTS, BUT SIMPLY MADE AN

16 ORDER WITH RESPECT TO -- ON A GOING-FORWARD BASIS;

17 RIGHT?

18 MR. TOMA: YOUR HONOR, NO. THE BANKRUPTCY COURT

19 HAS NOT MADE ANY ORDER WHATSOEVER ABOUT THOSE ACCOUNTS.

20 THE ONLY PLACE WHERE THIS LANGUAGE ABOUT THE BANK

21 ACCOUNTS FINDS ITSELF IN ANY ORDER IS IN THE SEPTEMBER

22 6TH ORDER IN THE STATE COURT, WITH JUDGE MEISINGER,

23 WHERE THE PEOPLE REPRESENTED IN THEIR PROPOSED ORDER TO

24 JUDGE MEISINGER THAT IT WOULD DO NOTHING AFTER SEPTEMBER

25 6TH OR SEPTEMBER 8TH. I'M SORRY; I FORGET THE ACTUAL

26 DATE.

27 THE COURT: SO IT IS THEN FOR MR. STEIN TO GO TO

28 THE BANKRUPTCY COURT TO SEEK TO HAVE THE

77

1 DEBTOR-IN-POSSESSION ACCOUNTS UNFROZEN.

2 MR. TOMA: I BELIEVE THAT'S WHAT HE SAID HE WOULD

3 DO IN HIS OPPOSITION BEFORE THIS COURT.

4 THE COURT: OKAY. WELL, THEN THAT'S WHAT YOU CAN

5 DO.

6 MR. STEIN: THAT'S THE LEAVE TO AMEND THAT THE

7 COURT ISSUED, AND THE COURT SAID THAT IT AGREES THAT THE

8 DIP ACCOUNTS SHOULD BE UNFROZEN, BUT THAT MONEY --

9 THE COURT: YOU MEAN, THAT'S YESTERDAY?

10 MR. STEIN: THAT'S YESTERDAY, BUT THE COURT ALSO

11 SAID THAT ANY MONEY IN THERE AS OF THE DATE OF THE

12 FREEZING SHOULD GO TO THE STATE. SO THAT WAS ITS

13 OPINION.

14 THE COURT: AGAIN, I DON'T HAVE THAT BEFORE ME, SO

15 I REALLY CAN'T DO ANYTHING ABOUT THAT --

16 MR. STEIN: RIGHT. IT'S NOT FOR TODAY.

17 THE COURT: -- BUT I EXPECT I'LL PROBABLY HEAR

18 FROM YOU AGAIN.

19 MR. STEIN: WELL, I WOULD RATHER -- GIVEN THAT THE

20 COURT IS ISSUING ORDERS --

21 ALL OF WHICH DON'T AFFECT ANY OF THESE

22 CLIENTS BECAUSE I'M GOING TO CONTINUE TO PROTECT THEM;

23 OBVIOUSLY, WE'VE CONTINUED TO PROTECT THEM. MR. DAVIS

24 HAS DONE AN EXCELLENT JOB IN ALL OF THE CASES.

25 GIVEN THAT I'M GOING TO CONTINUE TO PROTECT

26 THEM, I WOULD RATHER SIMPLY STIPULATE WITH THESE

27 ADVERSARIES REGARDING WHAT IS TO BE DONE. BECAUSE JUDGE

28 HYMAN, JUDGE PAUL HYMAN, THE CHIEF JUDGE OF THE FLORIDA

78

1 BANKRUPTCY COURT, SAID, "FILE AN AMENDED COMPLAINT IN

2 FIVE DAYS. YOU'RE RIGHT."

3 SO RATHER THAN SUE THE STATE AGAIN --

4 THE COURT: I JUST REALLY CAN'T TAKE JUDICIAL

5 NOTICE OF ANY OF THIS; I REALLY CAN'T. SO IF YOU HAVE

6 SOMETHING ELSE THAT YOU WANT ME TO DO, BRING IT BEFORE

7 ME WITH ADMISSIBLE EVIDENCE, IF THAT'S WHAT YOU'D LIKE

8 ME TO DO. I'M HAPPY TO LOOK AT IT. BUT AT THIS STAGE,

9 I'M DEALING WITH WHAT IS THE STATE OF THE EVIDENCE RIGHT

10 NOW.

11 SO I'M DENYING THE EX PARTE FOR THE REASONS

12 STATED. I'M ADOPTING MY TENTATIVE IN BOTH THE OSC RE

13 ASSUMPTION OF JURISDICTION OVER LAW PRACTICE OF MITCHELL

14 J. STEIN AND THE OSC RE PRELIMINARY INJUNCTION BEFORE

15 THE STATE BAR.

16 AND PEOPLE, BEFORE YOU LEAVE TODAY, I WANT

17 YOU TO MAKE SURE YOU GET THE PROPER ORDERS IN FRONT OF

18 ME. OKAY?

19 MS. LEECE: YOUR HONOR --

20 THE COURT: YES.

21 MS. LEECE: -- WE FILED AN ORDER, BUT I HAVE

22 ANOTHER COPY HERE.

23 THE COURT: OKAY. CAN WE JUST -- BECAUSE, REALLY,

24 IT'S NOW 3:30. I HAVE ONE OTHER -- I HAVE ONE OTHER

25 MATTER. I THINK WE'VE DEALT WITH MR. STEIN'S MATTER.

26 WE HAVE THE CONTINUED EX PARTE WITH RESPECT TO THE

27 RECEIVER AND MR. KRAMER.

28 MR. BENJAMIN: YES, YOUR HONOR.

79

1 WHEN WE CONTINUED THIS MATTER INITIALLY, IT

2 WAS GOING TO BE CONTINUED AS TO ALSO MR. KASSAS, BUT

3 THAT'S NOW BEEN RESOLVED.

4 AS TO MR. KRAMER, WE HAVE DRASTICALLY

5 NARROWED THE ISSUE. THERE WERE TWO OFFICE SUITES. AS

6 TO OFFICE SUITE 2006, MR. KRAMER'S FORMER COUNSEL, PRIOR

7 TO HER WITHDRAWAL, MS. KAUFMAN, AGREED THAT THAT

8 LIQUIDATION COULD PROCEED.

9 WE HAD NARROWED THE ISSUE, REALLY, DOWN TO

10 SUITE 2010. AS TO THAT, THERE WERE CERTAIN PERSONAL

11 ITEMS. WE STATED THAT THAT WAS FINE; MR. KRAMER COULD

12 PICK THOSE UP, EXCEPT FOR A FEW WHICH WE'VE BEEN

13 INFORMED MAY HAVE SUBSTANTIAL VALUE. WE STATED WE WILL

14 STORE THEM UNTIL THE CONCLUSION OF PROCEEDINGS.

15 IT REALLY CAME DOWN, LITERALLY, TO A SUITE

16 OF OFFICE FURNITURE THAT APPEARS TO HAVE SUBSTANTIAL

17 VALUE. WE HAVE OFFERED THAT IF MR. KRAMER CAN STORE

18 THOSE ITEMS SECURELY IN A WAY WHERE THEY WON'T BE HARMED

19 AND IT WON'T BE ANY COST TO THE RECEIVERSHIP, THEN WE

20 CAN WAIT ON THOSE ITEMS.

21 BUT WHAT WE DON'T WANT TO DO, THAT'S BEEN

22 PROPOSED BY MR. KRAMER'S ATTORNEY, IS THAT THE RECEIVER

23 SHOULD CONTINUE TO LEASE THAT OFFICE SPACE AT ABOUT $900

24 A MONTH.

25 OBVIOUSLY, YOUR HONOR, WHEN WE'RE TRYING TO

26 LIQUIDATE OFFICE SPACE TO MAXIMIZE VALUE, WE DON'T WANT

27 TO BE STORING OFFICE FURNITURE FOR MONTHS ON END OR

28 PAYING TO MOVE IT TO ANOTHER SITE TO STORE IT. SO THE

80

1 ISSUE REALLY IS THAT NARROW, IS, WE DON'T WANT TO INCUR

2 FURTHER COSTS FOR THE RECEIVERSHIP.

3 WE WANT TO MAXIMIZE VALUE BY GOING AHEAD AND

4 SELLING THESE ASSETS. OR MR. KRAMER WILLING TO TAKE US

5 UP ON OUR OFFER AND STORE THE ITEMS SECURELY AT NO COST

6 TO THE RECEIVERSHIP. EITHER WAY, ALL WE'RE TRYING TO DO

7 IS PROTECT THE VALUE OF THE ITEMS FOR THE RECEIVERSHIP.

8 THE COURT: DO WE NOW HAVE MR. KRAMER'S ATTORNEY?

9 MR. HAYES: RIGHT. GOOD AFTERNOON, YOUR HONOR.

10 JOHN HAYES. SORRY I WAS LATE.

11 THE COURT: I KNEW YOU HAD ANOTHER APPEARANCE.

12 MR. HAYES: RIGHT.

13 YOUR HONOR, IF I COULD, MR. BENJAMIN DIDN'T

14 SAY ANYTHING ABOUT THE CAR.

15 MR. BENJAMIN: WE'LL REACH THE CAR IN A MOMENT.

16 THE COURT: YEAH. WE KIND OF LEFT THE CARS, I

17 THOUGHT, LAST TIME, ANYWAY.

18 GO AHEAD.

19 MR. BENJAMIN: I WANT TO ADDRESS -- I WAS GOING TO

20 ADDRESS THE CARS SEPARATELY, YOUR HONOR. AS TO THE

21 CARS, MR. KRAMER HAS COMPLIED WITH THE COURT'S DIRECTION

22 TO IDENTIFY THE VEHICLES. HOWEVER, HE THEN STATED THAT

23 THEY WERE SUBJECT TO CERTAIN LIENS.

24 THE PAPERS SUPPLIED TO US ARE UNSIGNED AS TO

25 THE ALLEGED SECURITY INTEREST IN THE OLDER CAR. THERE'S

26 ALSO SUBSTANTIAL AMBIGUITY -- THERE'S TWO CARS. ONE OF

27 THEM HAS A BLUE BOOK OF ABOUT 5,000; THE OTHER, 20-SOME-

28 THOUSAND. THERE'S SUBSTANTIAL AMBIGUITY BOTH AS TO

81

1 WHETHER OR NOT THE SECURITY INTEREST EXISTS AND WHETHER

2 IT APPLIES TO THE SECOND CAR.

3 WE'VE REQUESTED FURTHER INFORMATION FROM MR.

4 KRAMER'S COUNSEL. AS OF TODAY, WE STILL HAVE NOT

5 RECEIVED IT. SO WE STILL DON'T HAVE SIGNED SECURITY

6 AGREEMENTS.

7 ADDITIONALLY, THE DOCUMENTS PROVIDED AS TO

8 THIS LIEN STATED THAT THE UNDERLYING PROMISSORY NOTE WAS

9 TO BE PAID OFF BY JANUARY 2010. SO WE'D REQUEST

10 INFORMATION AS TO, HAS THIS BEEN PAID OFF; AND IF NOT,

11 WHY HAS THIS CREDITOR NOT SIMPLY SEIZED THESE ASSETS,

12 ASSUMING THERE WAS A VALID SECURITY INTEREST. WE'VE NOT

13 RECEIVED THAT INFORMATION YET FROM MR. KRAMER OR HIS

14 COUNSEL.

15 WE HAVE OFFERED, YOUR HONOR -- MR. KRAMER

16 HAS STATED THAT IT WOULD BE HARDSHIP TO LOSE THE

17 VEHICLES, TO HIM AND HIS FAMILY. BASED ON EXPERIENCE

18 AND PRIOR RECEIVERSHIPS, WE KNOW THAT A CAR WITH A BLUE

19 BOOK OF 5,000 VALUE, BY THE TIME THE RECEIVERSHIP IS

20 DONE SELLING IT, IT WILL COST --

21 WE HAVE OFFERED -- ALTHOUGH WE'D WANT THE

22 COURT'S PERMISSION -- THAT THAT ONE VEHICLE COULD REMAIN

23 WITH MR. KRAMER AND HIS FAMILY, ESPECIALLY IF IT TURNS

24 OUT TO BE UNDERWATER.

25 THE MORE SUBSTANTIALLY VALUABLE CAR, UNLESS

26 IT TURNS OUT THAT THERE'S ALREADY A VALID SECURITY

27 INTEREST IN IT, WE BELIEVE, SHOULD BE TURNED OVER TO

28 RECEIVERSHIP TO PRESERVE THAT ASSET. IT'S WORTH

82

1 APPROXIMATELY 20-SOME-THOUSAND DOLLARS. ALTERNATIVELY,

2 WE'D VERY MUCH APPRECIATE THE INFORMATION WE'VE

3 REQUESTED, BUT WE STILL HAVEN'T RECEIVED IT, DESPITE

4 CONTINUING THE HEARING.

5 MR. HAYES: YOUR HONOR, WE FILED A -- YOU KNOW, I

6 SUBBED INTO THIS CASE LAST WEEK.

7 THE COURT: YEAH.

8 MR. HAYES: AND I ACTUALLY GOT FIVE BOXES OF FILES

9 MONDAY AFTERNOON. AND I SPOKE TO MR. BENJAMIN

10 YESTERDAY. WE DID FILE A RESPONSE YESTERDAY, WHICH I

11 WOULD BE SHOCKED IF YOU'VE ACTUALLY HAD A CHANCE TO LOOK

12 AT IT, BUT IT DID HAVE SOME OF THE ANSWERS THAT MR.

13 BENJAMIN WAS --

14 THE COURT: YEAH, BUT --

15 MR. BENJAMIN: WAS THAT SERVED ON MY OFFICES?

16 MR. HAYES: WELL, WE JUST FILED IT YESTERDAY

17 AFTERNOON. I DON'T -- I'M NOT SURE WHETHER WE DID MORE

18 THAN THROW IT IN THE MAIL.

19 MR. BENJAMIN: YOUR HONOR, I HAVEN'T SEEN THESE

20 DOCUMENTS, SO IT'S IMPOSSIBLE FOR ME TO RESPOND TO THEM.

21 THE COURT: YEAH, OKAY. BECAUSE THERE WAS

22 SOMETHING -- I MEAN, WITH RESPECT TO THE SECURITY

23 INTEREST, IT APPEARED AS THOUGH IT WAS A DIFFERENT CAR.

24 THAT WAS THE PROBLEM. AND THERE WAS NO EVIDENCE THAT

25 ANOTHER CAR WAS SUBSTITUTED. SO --

26 MR. HAYES: WELL, THAT -- I'M SORRY.

27 THE COURT: NO, YOU GO AHEAD.

28 MR. HAYES: THE SECURITY INTEREST IS WHAT'S CALLED

83

1 A BLANKET LIEN, AND IT COVERS ALL PERSONAL PROPERTY NOW

2 OWNED OR HEREINAFTER ACQUIRED.

3 THE COURT: IS THAT FOR THE -- LET'S SEE.

4 MR. HAYES: IT WELL, IT COVERS ALL PERSONAL

5 PROPERTY, EVERYTHING HE OWNS.

6 THE COURT: IS THAT FOR THE GARRETT COURT TRUST?

7 MR. HAYES: RIGHT. AND WE HAVEN'T BEEN ABLE TO

8 LOCATE SIGNED COPIES.

9 THE COURT: WELL, IS THAT AS A RESULT OF A

10 LAWSUIT?

11 MR. HAYES: YES. IT'S A SETTLEMENT IN A LAWSUIT

12 THAT HAPPENED A FEW YEARS AGO. THE DECLARATION -- I'M

13 SORRY MR. BENJAMIN HASN'T RECEIVED IT. I ASKED HIM

14 YESTERDAY IF WE COULDN'T CONTINUE THIS FOR A WEEK OR

15 SO --

16 THE COURT: WELL, I THINK THAT KIND OF MAKES

17 SENSE, SINCE NEW COUNSEL IS IN THERE. MAYBE

18 SOMETHING --

19 MR. HAYES: IF I CAN TELL YOU, ALSO, YOUR HONOR,

20 I'M A BANKRUPTCY LAWYER. I'M A CERTIFIED SPECIALIST BY

21 THE STATE BAR, AND MR. KRAMER CAME TO ME ABOUT

22 BANKRUPTCY. AND I HAVEN'T -- TO BE CANDID, I HAVEN'T

23 FIGURED OUT ANY WAY THAT BANKRUPTCY COULD HELP HIM RIGHT

24 NOW.

25 BUT IF HE DID FILE, THE CAR WOULD BE EXEMPT.

26 UNDER CALIFORNIA LAW, THAT CAR IS EXEMPT, EVEN IF IT

27 ISN'T UNDERWATER. THIS OFFICE EQUIPMENT THAT HE HAS

28 THAT MR. BENJAMIN SAID HAS SUBSTANTIAL VALUE, THE

84

1 EXEMPTION IS $11,000, UNDER CALIFORNIA LAW. IT'S NOT

2 WORTH MORE THAN $11,000 IN GARAGE SALE PRICES THESE

3 DAYS. AND I WOULD LIKE TO CONSIDER FILING SOME SORT OF

4 CLAIM OF EXEMPTION.

5 AND I DO HAVE A COUPLE OF OTHER THEORIES.

6 THE RECEIVERSHIP WAS ORDERED TO MAKE SURE THAT NO

7 PROPERTY -- THERE WAS A BOILERPLATE COMMENT THAT

8 PROPERTY COULD BE HIDDEN OR TRANSFERRED, AND WE HAVE TO

9 MAINTAIN THE STATUS QUO.

10 THEY KNOW WHERE THE CAR IS. IT'S NOT GOING

11 ANYWHERE. THEY KNOW WHERE THE OFFICE EQUIPMENT IS.

12 IT'S NOT GOING ANYWHERE.

13 BY THE WAY, MR. KRAMER IS NOT PRACTICING

14 LAW. HE HAS NO INCOME. HE HAS NO MONEY. HE'S AN OLD

15 FRIEND OF MINE. THAT'S WHY I'M HERE. HE'S A GOOD MAN

16 AND A GOOD LAWYER. AND I STEPPED IN BECAUSE HE HAS NO

17 OTHER CHOICE.

18 AND HE NEEDS THAT CAR, AND I WOULD

19 APPRECIATE -- AT LEAST, BRING IT ON ON REGULAR NOTICE

20 AND GIVE US A CHANCE TO RESPOND. THE CAR IS NOT GOING

21 ANYWHERE, OR THE OFFICE EQUIPMENT.

22 MR. BENJAMIN: YOUR HONOR, I APPRECIATE THE

23 DIFFICULTY OF COUNSEL JUST COMING IN, BUT THE HISTORY,

24 AS WE LAID OUT IN OUR ORIGINAL EX PARTE PAPERS -- IT

25 STARTED WITH THE TEMPORARY RESTRAINING ORDER THAT

26 APPLIED TO THE CARS. THERE WAS A HEARING AND A

27 PRELIMINARY INJUNCTION.

28 DURING ALL THAT TIME, THE RECEIVER WAS

85

1 ASKING FOR COOPERATION FROM MR. KRAMER AND HIS COUNSEL.

2 WHEN WE WENT TO THE LAST HEARING, MR. KRAMER THEN

3 FINALLY, BECAUSE THE COURT COMPELLED TO COMPELLED IT,

4 COMPLIED WITH THESE ORDERS THAT WERE ALREADY A COUPLE

5 MONTHS OLD BY THAT POINT.

6 WHEN I THEN SPOKE FURTHER WITH MR. KRAMER'S

7 COUNSEL AT THE TIME, MS. KAUFMAN -- WHO NEVER ADVISED ME

8 THAT THEY WERE ABOUT TO CHANGE COUNSEL -- WE THEN WORKED

9 OUT A DEAL WHERE WE WERE GOING TO GO BACK TO THIS COURT

10 ABOUT TWO WEEKS AGO FOR THIS CONTINUED HEARING, A WEEK

11 AND A HALF AGO.

12 AND SHE -- I SAID, "WELL, WE'D LIKE THE

13 ADDITIONAL INFORMATION ABOUT THE CARS. WE'D LIKE TO SEE

14 WHAT CAN BE DONE ABOUT THIS OFFICE FURNITURE." WE WERE

15 TRYING TO ELIMINATE ISSUES.

16 AND SHE SAID, WELL, COULD WE CONTINUE IT TO

17 THIS ALREADY ESTABLISHED DATE.

18 AND I SAID, "OKAY. LET'S DO THAT. LET'S

19 SEE IF WE CAN GET IT RESOLVED."

20 SO THE RECEIVERSHIP IS NOW IN THE DIFFICULT

21 POSITION WHERE, ON A RELATIVELY SIMPLE ISSUE OF THE

22 CARS, THAT SHOULD HAVE BEEN RESOLVED, REALLY, A COUPLE

23 MONTHS AGO, IT'S NOW BEING REQUESTED THAT WE CONTINUE IT

24 AGAIN.

25 AND OUR ONLY OBJECTIVE HERE IS JUST TO

26 MAXIMIZE THE VALUE OF THE ASSETS FOR THE RECEIVERSHIP.

27 AND THE MORE THIS KEEPS BEING DRAWN OUT BY MR. KRAMER

28 AND HIS COUNSEL AND NOW HIS NEW COUNSEL, THE MORE COSTS

86

1 THAT CAUSES FOR THE RECEIVERSHIP.

2 THE SCOPE OF THE ORDER IS WHAT IT IS. IT'S

3 NOT A BANKRUPTCY MATTER; IT'S A RECEIVERSHIP. WE'RE

4 GOING TO COMPLY WITH WHATEVER ORDERS, OBVIOUSLY, AND TRY

5 AND CARRY OUT WHATEVER ORDERS THE COURT INSTITUTES, BUT

6 ALL WE'RE TRYING TO DO RIGHT NOW IS MAXIMIZE VALUE.

7 AND HAVING MR. KRAMER AND HIS NEW COUNSEL

8 NOW GOING TO EXTEND THIS OUT ISN'T GOING TO MAXIMIZE

9 VALUE. IT'S GOING TO CAUSE MORE COSTS FOR THE

10 RECEIVERSHIP.

11 I SPOKE -- THE SECOND WE GOT THE PAPERS,

12 OR -- WELL, WITHIN ABOUT 12 HOURS OF GETTING THE

13 SUBSTITUTION PAPERS, I WROTE A LETTER TO THE NEW

14 COUNSEL. I ASKED HIM TO GIVE ME A CALL.

15 WE WERE ABLE TO TALK ON MONDAY. I ASKED FOR

16 THE ADDITIONAL INFORMATION. I REPEATED THE SAME

17 INFORMATION I'D GIVEN TO MS. KAUFMAN. I TRIED TO GET

18 THIS RESOLVED, BECAUSE WE DON'T WANT TO SPEND TIME ON

19 ISSUES LIKE CARS AND OFFICE FURNITURE.

20 BUT EXTENDING THIS OUT YET AGAIN DOESN'T

21 MAKE ANY SENSE TO US, YOUR HONOR.

22 THE COURT: WELL --

23 MR. BENJAMIN: WE THINK, AT THIS POINT, MR. KRAMER

24 HAS HAD THE OPPORTUNITY TO DEMONSTRATE THE EXISTENCE OF

25 THE SECURITY INTEREST. AND HE'S HAD AN OPPORTUNITY, AS

26 TO THE OFFICE FURNITURE, TO COME UP WITH HIS ZERO COST

27 SOLUTION FOR THE RECEIVERSHIP.

28 IF HE DOESN'T WANT TO DO THAT, PERHAPS THE

87

1 COURT WANTS TO GIVE HIM ANOTHER WEEK ARE TWO TO DO THOSE

2 THINGS, BUT I'D HATE TO COME BACK FOR ANOTHER HEARING

3 AND MORE COSTS ON THESE ITEMS.

4 THE COURT: WELL, YOU KNOW, THE FACT OF THE MATTER

5 IS THAT THE LAST TIME I CONTINUED IT, IT WAS FOR

6 PURPOSES OF SEEING IF THINGS COULD BE WORKED OUT. AND

7 YOU, IN FACT, DID WORK THINGS OUT WITH THE OTHER OFFICE

8 LOCATION. YOU WERE ABLE TO WORK THAT OUT.

9 I THINK THAT WHAT THE FOCUS OF MR. KRAMER'S

10 ATTORNEYS WERE AT THE LAST HEARING -- I THINK THE WRIT

11 WAS SORT OF OUTSTANDING. I DON'T THINK THE COURT OF

12 APPEAL HAD MADE A DECISION AT THAT POINT. AND I THINK

13 FOLLOWING THAT, THEY SUBSTITUTED OUT AND NEW COUNSEL

14 CAME IN.

15 I WOULD LIKE TO GIVE YOU A COUPLE MORE WEEKS

16 TO TRY TO WORK THIS OUT. AND HOPEFULLY, YOU WILL BE

17 ABLE TO MAXIMIZE THE ASSETS BECAUSE, HOPEFULLY, YOU DO

18 WORK IT OUT, AND YOU DON'T HAVE TO COME IN AGAIN.

19 I WOULD EVEN BE HAPPY TO CONDUCT THAT

20 HEARING BY COURT CALL, IF NECESSARY. OKAY?

21 MR. HAYES: GREAT.

22 THE COURT: THAT'S WHAT WE'LL DO.

23 MS. LEECE: YOUR HONOR, I'M SORRY. BLITHE LEECE

24 FROM STATE BAR.

25 WE ACTUALLY STILL NEED TO HAVE A HEARING AND

26 OSC ON THE PERMANENT ORDER FOR MR. KRAMER. JUDGE

27 MEISINGER NEVER -- WE SUBMITTED PROPOSED ORDERS AT THE

28 LAST HEARING.

88

1 THE COURT: YES.

2 MS. LEECE: HE CROSSED OUT "PROPOSED" AND SAID HE

3 WANTED FURTHER BRIEFING AS TO THE ISSUE OF WHY THIS

4 SHOULD BE PERMANENT ORDERS AND NOT PRELIMINARY

5 INJUNCTION.

6 THE COURT: OKAY.

7 MS. LEECE: BROOKE SCHAFER, FROM THE STATE BAR,

8 WROTE A BRIEF TO THAT ISSUE AND FILED IT WITH THIS COURT

9 WHEN THE CASE WAS TRANSFERRED, BUT WE STILL NEED A DATE,

10 JUST SO THE COURT IS AWARE.

11 AND SINCE MR. KRAMER'S COUNSEL IS HERE,

12 MAYBE WE COULD GET A COURT DATE FOR THAT HEARING, AS

13 WELL, SO THAT MATTER CAN --

14 THE COURT: DO YOU HAVE THOSE PAPERS?

15 MR. HAYES: I DO, YES.

16 THE COURT: YOU DO? OKAY.

17 MR. STEIN: YOUR HONOR, WE ALSO, I THINK, NEED

18 DATES FOR A STATUS CONFERENCE FOR -- AND I MEAN, THE

19 PRELIMINARY INJUNCTION PROCEEDING IS, I PRESUME, GOING

20 TO NOW PROCEED TO DISCOVERY AND TRIAL. SO I DON'T KNOW

21 IF A STATUS CONFERENCE IS RIPE TO LOOK FOR TODAY, BUT

22 THERE'S ABOUT 150 DEPOSITIONS WE NEED TO TAKE.

23 THE COURT: OKAY. SO WE'RE TALKING ABOUT THREE

24 DIFFERENT THINGS. WE'RE TALKING ABOUT A CONTINUED

25 HEARING ON THE RECEIVER'S EX PARTE; RIGHT?

26 MR. BENJAMIN: YES, YOUR HONOR.

27 THE COURT: WE'RE TALKING ABOUT THE HEARING ON THE

28 ISSUE OF WHETHER OR NOT THE ORDER WITH RESPECT TO THE

89

1 STATE BAR IS PERMANENT.

2 MS. LEECE: AS TO KRAMER, THE ASSUMPTION OF

3 JURISDICTION --

4 THE COURT: AS TO KRAMER.

5 MS. LEECE: EXACTLY.

6 THE COURT: ALL RIGHT. AND WE'RE TALKING ABOUT A

7 STATUS CONFERENCE.

8 MR. STEIN: I THINK THAT -- MY UNDERSTANDING IS,

9 THE ASSUMPTION ORDER IS APPEALABLE, SO -- BUT I

10 UNDERSTAND THAT THE SEPARATE ACTION, THE RELATED ACTION

11 BY THE PEOPLE, IS AN ONGOING LITIGATION MATTER. SO I

12 WAS JUST WONDERING WHETHER A STATUS CONFERENCE SHOULD BE

13 SET REGARDING THE PEOPLE'S ACTION.

14 THE COURT: OKAY.

15 MR. STEIN: THE 17200 ACTION.

16 THE COURT: ALL RIGHT. SO LET'S GET A DATE FOR

17 TWO WEEKS WITH RESPECT TO THE RECEIVER'S EX PARTE. AND

18 THEM, IN THE MEANTIME, I ASSUME THERE WILL BE SOME

19 FURIOUS MEET-AND-CONFERS TO TRY TO WORK IT OUT. AND YOU

20 CAN JUST CALL AND TAKE IT OFF CALENDAR IF YOU WORK

21 THINGS OUT.

22 TWO WEEKS. CAN I GET A DATE?

23 THE COURT OFFICER: I'M LOOKING.

24 MR. HAYES: YOUR HONOR, I WONDER IF THE HEARING ON

25 THE STATE BAR'S ACTION -- IT'S AN OSC, I BELIEVE. I

26 WONDER IF THAT COULD BE AN EVIDENTIARY HEARING, TO

27 ALLOW -- THERE'S NEVER BEEN ANY EVIDENCE TAKEN, ORALLY,

28 OTHER THAN THE PLEADINGS THAT WERE FILED. AND WE

90

1 HAVEN'T HAD A CHANCE TO CROSS-EXAMINE ANY WITNESSES.

2 AS FAR AS MAKING THIS INJUNCTION PERMANENT,

3 I WOULD THINK, YOU KNOW, THERE OUGHT TO BE SOME

4 TESTIMONY. SO WHEN YOU PICK A DATE, MAYBE WE CAN PICK A

5 DATE WHERE THERE WILL BE ENOUGH TIME TO DO THAT.

6 MS. LEECE: WELL, YOUR HONOR, AS OF THE 6190 AND

7 6180, THE -- AS THE STATUTE LAYS OUT, THERE IS NO

8 SUBSECTION THAT ADDRESS AN EVIDENTIARY HEARING. IT'S

9 JUST A VERIFIED APPLICATION OF PETITION AND SUPPORTING

10 DECLARATIONS, WHICH WE PROVIDED.

11 THE WRIT FROM THE APPELLATE COURT DIDN'T

12 ADDRESS --

13 THE COURT: I THINK IT DEALT WITH THAT, DIDN'T IT?

14 MS. LEECE: THEY STATED, BASICALLY, DICTA, BUT

15 THEY DIDN'T GIVE EXACTLY -- THERE WAS NO -- THAT ISSUE

16 WAS ACTUALLY NOT BRIEFED, I DON'T BELIEVE, SO ANY

17 STATEMENT BY THE APPELLATE COURT WAS STRICTLY DICTA.

18 SO WE WOULD OBJECT TO HAVING AN EVIDENTIARY

19 HEARING.

20 THE COURT: YOU DON'T THINK MAYBE WE SHOULD HAVE

21 THE ISSUE BRIEFED AS TO WHETHER OR NOT THERE SHOULD BE

22 AN EVIDENTIARY HEARING?

23 MS. LEECE: THAT'S FINE WITH US, IF THE COURT

24 WOULD LIKE THAT.

25 THE COURT: WHY DON'T WE DO THAT --

26 MR. HAYES: THAT'S FINE.

27 THE COURT: -- AS A PRELIMINARY, HAVE A BRIEFING

28 ON IT --

91

1 MR. HAYES: WE'RE TALKING ABOUT A PERMANENT

2 INJUNCTION.

3 THE COURT: PARDON?

4 MR. HAYES: I CAN'T BELIEVE THAT WOULD BE ENTERED

5 WITHOUT TESTIMONY.

6 THE COURT: YEAH. SO WE CAN AGREE ON A BRIEFING

7 SCHEDULE AND A DATE FOR THE HEARING.

8 MS. LEECE: THAT'S FINE.

9 THE COURT: OKAY.

10 MR. STEIN: YOUR HONOR, IT WAS MY UNDERSTANDING

11 THAT THE APPELLATE COURT RULING WAS THE LAW OF THE CASE.

12 TO THE EXTENT THERE'S GOING TO BE EVIDENCE TAKEN, WE

13 WOULD LIKE TO -- I THINK WE HAVE A CONSTITUTIONAL RIGHT

14 TO CROSS-EXAMINE WITNESSES, GIVEN THAT WE'RE BEING FOUND

15 TO HAVE BEEN ENGAGED IN A CONSPIRACY.

16 THE COURT: OKAY. WE'RE TALKING ABOUT MR. KRAMER

17 RIGHT NOW; WE'RE TALKING ABOUT MR. KRAMER.

18 MR. STEIN: NO, I UNDERSTAND WE'RE TALKING ABOUT

19 MR. KRAMER, BUT THE COURT CITED MR. KRAMER AS LAW OF THE

20 CASE REGARDING ASSUMPTION OF JURISDICTION. AND NOW

21 WE'RE TALKING ABOUT HAVING AN EVIDENTIARY HEARING.

22 SO I DON'T -- IF THERE'S AN EVIDENTIARY

23 HEARING, IT'S THE SAME ISSUE. WE'D LIKE TO PARTICIPATE

24 IN THE EVIDENTIARY HEARING, REGARDING US. THE COURT IS

25 SAYING IT'S OKAY TO ENTER AN ORDER AGAINST MITCHELL J.

26 STEIN, BUT IT --

27 THE COURT: TODAY'S MOTION WAS TO MAKE THE ORDER

28 PERMANENT; RIGHT?

92

1 MS. LEECE: YES.

2 THE COURT: YES.

3 MR. STEIN: RIGHT. AND THE COURT INDICATED THAT

4 THE LAW OF THE CASE WAS THAT 6180 AND -90 WAS READ IN A

5 CERTAIN WAY. AND NOW COUNSEL HAS ASKED FOR AN

6 EVIDENTIARY HEARING. AND TO THE EXTENT THERE'S AN

7 EVIDENTIARY HEARING, THOSE WITNESSES -- WE HAVE A RIGHT

8 TO CONFRONT AND CROSS-EXAMINE THEM AND TO --

9 THE COURT: NO, I -- OKAY. YOU'RE TALKING ABOUT

10 APPLES AND ORANGES. IT'S TALKING ABOUT THE CODE SECTION

11 AS COVERING THIS KIND OF BEHAVIOR.

12 YOU SAID YOU'RE NOT DEAD, AND YOU'RE NOT AN

13 ALCOHOLIC, AND YOU'RE NOT ALL OF THESE THINGS. AND YOU

14 WERE ARGUING THAT THE CODE SECTION DOESN'T APPLY TO THE

15 SITUATION. ALL RIGHT. THE APPELLATE COURT FOUND

16 DIFFERENTLY AND FOUND THAT IT COULD BE READ BROADLY.

17 THAT IS NOT THE ISSUE AS TO WHETHER OR NOT

18 THIS IS A PERMANENT ORDER. TODAY WAS A MOTION -- WAS AN

19 OSC RE MAKING THE ORDER PERMANENT. YOU DIDN'T RAISE

20 THIS ISSUE, YOU DIDN'T ASK FOR AN EVIDENTIARY HEARING,

21 AND I'VE MADE THE RULING.

22 SO WE CAN SET A HEARING ON WHETHER OR NOT

23 THERE OUGHT TO BE AN EVIDENTIARY HEARING WITH RESPECT TO

24 KRAMER MATTER WITH THE STATE BAR.

25 MR. STEIN: MY OBJECTION TO SUCH A BIFURCATED

26 PROCEEDING IS NOTED; CORRECT?

27 THE COURT: WELL, YOU KNOW WHAT? YOU CAN --

28 MR. STEIN: I JUST -- I'M JUST -- I JUST WANT IT

93

1 NOTED FOR THE RECORD.

2 THE COURT: WELL, YOU CAN -- I THINK YOU CAN

3 PROBABLY RAISE THAT SOME WAY, BUT -- AND YOU DID MAKE

4 YOUR RECORD. BUT YOU MIGHT WANT TO THINK ABOUT THAT.

5 MR. STEIN: THANK YOU.

6 THE COURT: ALL RIGHT. DO YOU THINK 45 DAYS?

7 MS. LEECE: THAT'S FINE.

8 THE COURT: THEN WE'LL AGREE ON A BRIEFING

9 SCHEDULE.

10 SO CAN WE GET A DATE IN 45 DAYS? BUT WE

11 STILL HAVEN'T GOTTEN A DATE FOR THE TWO-WEEK, HAVE WE?

12 MS. LEECE: WE HAVE NOT, YOUR HONOR.

13 THE COURT OFFICER: DECEMBER 5TH AT 1:45.

14 THE COURT: ALL RIGHT.

15 MR. HAYES: WORKS FOR ME.

16 THE COURT: OKAY. SO CAN YOU HAVE YOUR PAPERS

17 FILED ON THAT ISSUE ON NOVEMBER 4TH?

18 MR. HAYES: SURE.

19 THE COURT: ALL RIGHT. AND THEN THE OPPOSITION

20 PAPERS ON THE 18TH? AND THEN ANY REPLY ON NOVEMBER

21 30TH?

22 MR. HAYES: PERFECT.

23 THE COURT: ALL RIGHT. WE'LL SET A STATUS

24 CONFERENCE FOR THAT SAME DATE IN ALL CASES. I'D LIKE A

25 JOINT STATUS CONFERENCE STATEMENT FIVE COURT DAYS IN

26 ADVANCE.

27 MR. TOMA, CAN YOU TAKE RESPONSIBILITY FOR

28 GETTING THAT TOGETHER?

94

1 MR. TOMA: YES, YOUR HONOR.

2 THE COURT: OKAY. THANK YOU.

3 MR. STEIN: YOUR HONOR, IS --

4 THE COURT: AND THEN WE NEED A DATE IN TWO WEEKS

5 ON THE CONTINUATION OF THE EX PARTE -- THE RECEIVER'S EX

6 PARTE, WITH RECEIVER AND MR. KRAMER'S ATTORNEY TO MEET

7 AND CONFER AND TRY TO WORK THAT OUT. SO A TWO-WEEK

8 DATE.

9 THE COURT OFFICER: I HAVE NOVEMBER 8TH AT 2:45.

10 THE COURT: OKAY. NOVEMBER 8TH AT 2:45?

11 MR. HAYES: ONE SECOND, JUDGE.

12 MR. BENJAMIN: THAT'S AGREEABLE WITH US, IF IT

13 WORKS FOR COUNSEL.

14 MR. HAYES: THAT'S FINE.

15 THE COURT: OKAY. THANK YOU.

16 THEN I'M GOING TO ASK THE PEOPLE, MR. TOMA,

17 THEN, WILL YOU GIVE NOTICE ON THIS?

18 MR. TOMA: YES, YOUR HONOR.

19 THE COURT: OKAY. AND THEN, LASTLY, PLEASE SUBMIT

20 YOUR ORDERS TO THE CLERK, AND THEN THE APPROPRIATE PARTY

21 HAS TO RE-SERVE ALL. OKAY?

22 MS. LEECE: YES, YOUR HONOR.

23 MR. STEIN: YOUR HONOR, JUST A MATTER OF CLARITY.

24 ARE THERE EXISTING STAYS IN THIS ACTION OF ANY KIND?

25 YOU KNOW --

26 THE COURT: EXISTING STAYS?

27 MR. STEIN: COMPLEX LITIGATION DEPARTMENT STAYS?

28 THE COURT: YEAH, UNTIL THE DATE OF THE STATUS

95

1 CONFERENCE.

2 MR. STEIN: THE STAY IS ON ANY DISCOVERY?

3 THE COURT: YES.

4 MR. STEPHENSON: YOUR HONOR, MY NAME IS BILL

5 STEPHENSON, AND I'M REPRESENTING MYSELF. AT THE LAST

6 HEARING, WE HAD -- I SPOKE WITH MR. TOMA. YOU'D

7 REQUESTED THAT WE GET TOGETHER AND TRY TO FREE MY --

8 FROM THE ASSET FREEZE, TO FIGURE OUT WHAT I'M SUPPOSED

9 TO GET.

10 AND MR. TOMA SAID -- I TOOK MY BANK

11 STATEMENTS AND SHOWED THAT AS OF NOVEMBER 2010 -- THAT

12 WAS WHEN THE MASS JOINDER CAME INTO FRUITION, AND I'D

13 ALREADY HAD $150,000 SAVED UP. EXCUSE ME.

14 AND SO MOVING FORWARD, HE HAD ASKED THAT I

15 GET TOGETHER MY BANK STATEMENTS. WHEN I SPOKE, THEN,

16 WITH THE RECEIVER, HE SAID, "OH, NO. WE NEED TO GO BACK

17 TO 2008." HE SAID, "I WANT TO KNOW WHERE EVERY PENNY IS

18 COMING FROM."

19 WELL, I DIDN'T WORK FOR THIS COMPANY -- I

20 MEAN, THIS WAS A NEW VENTURE, AND IT SHOULD ONLY BE

21 PERTAINING TO WHAT HAPPENED FROM NOVEMBER 2010 GOING

22 FORWARD. SO WE COULDN'T COME TO A RESOLUTION.

23 AND AGAIN, YOU HEARD MY BOSS. I WAS NOTHING

24 BUT AN EMPLOYEE WITH THE COMPANY.

25 SORRY. I NEED WATER. I'M DRY OVER HERE.

26 THE COURT: SORRY. OKAY.

27 MR. STEPHENSON: BUT I WAS AN EMPLOYEE FOR THE

28 COMPANY. MR. MC NAMARA STATED IN COURT, FROM THE FIRST

96

1 JUDGE, THAT MY ACCOUNT WAS OVERFROZEN.

2 SO I'D LIKE SOME KIND OF RESTITUTION. I'VE

3 GOT MY CHILDREN'S COLLEGE. AND I'M ILL, AS WELL.

4 MR. BENJAMIN: YOUR HONOR, JUST TO CLARIFY THE

5 RECEIVER'S POSITION. THE RECEIVER STATED THAT THE ONE

6 DEFENDANT WHO MIGHT BE OVERFROZEN WAS MR. STEPHENSON.

7 WE HAVE NOT AGREED THAT HE IS OR IS NOT.

8 WHEN THE COURT INQUIRED IF THAT WAS THE ONE

9 DEFENDANT THAT WE HAD THAT POSSIBILITY WITH, WE WOULD

10 JUST ASK THAT HE MAKE A MOTION, IN ESSENCE, IN THE EVENT

11 THAT HE BELIEVES HE IS OVERFROZEN, AND HE CAN SUBMIT THE

12 FACTS TO THE COURT.

13 BUT OBVIOUSLY, TRYING TO RESPOND TO THIS

14 THIS AFTERNOON, YOUR HONOR, I DON'T BELIEVE THAT WOULD

15 BE THE APPROPRIATE TIME --

16 THE COURT: YOU'D THINK THAT MAYBE IT WOULD BE

17 VERY IMPORTANT -- A VERY IMPORTANT FACT, IF HE DIDN'T

18 START WORKING FOR THE COMPANY UNTIL NOVEMBER 10 -- OR

19 NOVEMBER OF 2010.

20 MR. STEPHENSON: RIGHT.

21 MR. BENJAMIN: YES, YOUR HONOR. WE'D ASK THAT HE

22 SUBMIT HIS RELEVANT FACTS REGARDING THAT, WITH ANY

23 MOTION HE'D SUBMIT AS TO WHY HE BELIEVES HE IS

24 OVERFROZEN.

25 THE COURT: IF YOU WANT TO, YOU COULD APPEAR ON

26 11-8 AT 2:45. YOU COULD HAVE A HEARING ON THAT DATE.

27 YOU CAN SUBMIT YOUR PAPERWORK TO THE RECEIVER PRIOR TO

28 THAT DATE, AND TO THE COURT.

97

1 MR. STEPHENSON: I'M ILL, AND I'M STARTING TO

2 SHAKE, AND I CAN'T STOP IT. I'M JUST GOING TO SHAKE.

3 BUT I'M UNDERSTANDING.

4 THE COURT: DO YOU NEED SOME WATER?

5 MR. STEPHENSON: WELL, I NEED MEDICINE. I'M A

6 SEVERE DIABETIC, AND I HAVE PANCREAS ISSUES.

7 THE COURT: ALL RIGHT. I WANT YOU TO BE ALL

8 RIGHT. YOU CAN SIT DOWN TOO. IF THAT HELPS, YOU CAN

9 SIT DOWN.

10 MR. STEPHENSON: OKAY.

11 THE COURT: YOU DON'T HAVE TO STAND UP.

12 BUT WOULD THAT DATE WORK FOR YOU?

13 MR. STEPHENSON: ABSOLUTELY.

14 THE COURT: ALL RIGHT. SO WE'LL SET IT ON THAT

15 DATE, AS WELL. OKAY?

16 MR. STEPHENSON: OKAY. THANK YOU.

17 THE COURT: OKAY. I THINK WE'RE DONE.

18 THANK YOU VERY MUCH.

19 MR. TOMA: THANK YOU, YOUR HONOR.

20 MR. STEIN: THANK YOU, YOUR HONOR.

21 MR. DAVIS: THANK YOU, YOUR HONOR.

22 (PROCEEDINGS CONCLUDED AT 3:54 P.M.)

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