cgm Doc 4168 Filed 07/13/15 Entered 07/13/15 21:18:54 Main Document Pg 1 of 97 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

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1 Pg 1 of 97 MICHAEL J. MANDELBROT, SBN Attorney At Law 11 Bridle Path Lane Novato, CA Telephone (415) Telephone: (800) mandelbrot@asbestoslegalcenter.org Attorney for Beneficiary Rhonda Levine and Beneficiaries Of the Manville Personal Injury Settlement Trust UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: JOHNS-MANVILLE CORPORATION, et al., Case Nos. 82 B (CGM) Through 82 B (CGM) Chapter 11 Debtors, MASTER INDEX FOR REPLY OF MANDELBROT LAW FIRM AND THE BENEFICIARIES TO THE RESPONSE TO OBJECTIONS TO THE APPLICATION FOR ORDER APPROVING ACCOUNT OF TRUSTEES Reply Description of Objections Exhibit A Complaint, Mandelbrot v. Stephen Healy, Marin Superior Court, CIV Exhibit B Declaration of Mandelbrot, J.T. Thorpe v. Mandelbrot, Bankruptcy Exhibit C Declaration of Mandelbrot, Western Asbestos Co., Bankruptcy Exhibit D Chapter 11 Trustee Handbook Exhibit E Various Newspaper Articles re Alan Brayton Fraud Exhibit F Mandelbrot Letter to Trust Executive Director dated September 28, 2012 Exhibit G Victim Impact Statement, June, 2015

2 Pg 2 of 97 MICHAEL J. MANDELBROT, SBN Attorney At Law 11 Bridle Path Lane Novato, CA Telephone (415) Telephone: (800) mandelbrot@asbestoslegalcenter.org Attorney for Beneficiary Rhonda Levine and Beneficiaries Of the Manville Personal Injury Settlement Trust UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: JOHNS-MANVILLE CORPORATION, et al., Case Nos. 82 B (CGM) Through 82 B (CGM) Chapter 11 Debtors, REPLY OF MANDELBROT LAW FIRM AND THE BENEFICIARIES TO THE RESPONSE TO OBJECTIONS TO THE APPLICATION FOR ORDER APPROVING ACCOUNT OF TRUSTEES The Mandelbrot Law Firm, Individually, and on behalf of Rhonda Levine and hundreds of Beneficiaries of the Manville Personal Injury Settlement Trust submit this Reply to the Response of the Trustees of the Manville Personal Injury Settlement Trust to the Objection to the Trustees Accounting Application filed by the Mandelbrot Law Firm and 1

3 Pg 3 of 97 Beneficiaries for the period January 1, 2014 through December 31, 2014 (Dkt. No. 4162) (hereinafter Mandelbrot Objection ). 1 Mandelbrot s objection correctly asserts the Account of the Trustees pending before this Court omits material facts regarding the Trustees and Fiduciaries unlawful activities and more accurately that the Trustees and the Trust have acted criminally in the concealment and cover-up of the fraudulent Manville Trust claim filed and signed by Alan Brayton (Chairman the Trust Advisory Committee of many Chapter 11 Trusts) and the wholly improper suspension of Mandelbrot and Beneficiary claims. Reduced to its essence, Mandelbrot s Objection is about exposing Trustee and Fiduciary corruption, collusion, concealment of fraud, favoritism and bad faith taking place at the Manville Trust (for a decade!) with the Mandelbrot Law Firm and the Beneficiaries Mandelbrot represents as the scapegoats in the Trustees and Fiduciaries unlawful conduct. Predictably (given the propensity to commit fraud before this Court), the Trustees and Garelick s Response misrepresents and misleads this Court with regards to critical facts in an effort to further their fraud and concealment thereof while failing to cite one provision of the Manville Trust Distribution Procedures, By Laws or other Manville Documents which support their corrupt suspension of Mandelbrot. Specifically, Garelick and the Trustees in the Response misled this Court with regard to the following: 1) The Thorpe Case against Mandelbrot; 2) The criminal conduct of Alan Brayton in the filing of a fictitious Manville claim; 3) Garelick, the Trustees, and the Fiduciaries concealment and cover-up Brayton s fraud; and 4) Mandelbrot s lawsuit filed against Healy. 2 1 Mandelbrot has been forced to Object and engage in factual and verified accusations due to the Trustees and Fiduciaries ongoing bad faith, collusion, corruption and fraud, including the concealment and cover up before this Court, specifically by the Trustees and Garelick of the Criminal Conduct of Alan Brayton and Brayton Purcell in the filing of the fraudulent Kananian claim and John Lynch matters discussed herein. 2 The Complaint filed by Healy against Mandelbrot submitted before this Court and attached as part of the Trustees and Garelick s response was dismissed by Healy in December Garelick knew this Healy Complaint against Mandelbrot was dismissed and that Mandelbrot 2

4 Pg 4 of 97 Critical facts Garelick and the Trustees also forgot to mention relating to the reliability of Mandelbrot? Mandelbrot s extensive investigation and reporting to Federal and Local authorities of the theft of Manville Trust Funds in 2012, led to a felony conviction and restitution of thousands of dollars of beneficiary funds. As has been presented in the Objection, and now with additional facts in response to the Trustee s reply, the Manville Trustees have fraudulent and through collusion, concealment and bad faith improperly suspended Mandelbrot and Beneficiary claims, committed bankruptcy crimes, and misled the Court in their response. DISCUSSION THE TRUSTEES CITE NO AUTHORITY FOR THE SUSPENSION OF MANDELBROT, BUT AS EXPECTED, POINT TO THE WHOLLY UNRELATED AND FRAUDULENT THORPE CASES AGAINST MANDELBROT I. As predicted in the Objection, the Trustees fail to point to one Manville document or Mandelbrot Manville claim filing by Mandelbrot which supports the suspension of Mandelbrot, but instead focuses on the wholly unrelated and fraudulent Thorpe cases against Mandelbrot currently under Appeal and subject to an extensive Judicial Complaint against Judge Sheri Bluebond. 3 had sued Healy. See Exhibit A. This is just another example of the fraud of the Trustees and Garelick. They clearly knew a Complaint was dismissed, but represented false facts associated with the same before this Court. 3 For brevity, the Judicial Complaint will not be included. However, it is important to note that during the entire Thorpe cases against Mandelbrot, Judge Sheri Bluebond was simultaneously serving on at least 4 prestigious Boards of Directors with Counsel for Thorpe against Mandelbrot. At the same time (and throughout the case against Mandelbrot), the lawyers for Thorpe were funding and sponsoring lavish speaking engagement for Judge Bluebond in support of her reappointment in 2014 (just after the case against Mandelbrot). Clearly, Bluebond has a close and personal relationship with counsel for Thorpe and should have recused herself. These facts were not discovered by Mandelbrot until after the conclusion of the case. 3

5 Pg 5 of 97 The nature of the fraudulent Thorpe case against Mandelbrot is best summarized in a sworn Declaration signed by Michael J. Mandelbrot dated March 12, See Exhibit B. Additional facts related to the fraudulent Thorpe case are also contained in the sworn Declaration of Michael J. Mandelbrot dated June 6, See Exhibit C. All facts contained in both Declarations are well known to both the Trustees, and Jared Garelick, as well as Manville Trust Fiduciaries. 4 Unquestionably, any limited issues of unreliability relating to Mandelbrot in the Thorpe cases, as raised by the Trustees and Garelick in the response, were brought in bad faith, and wholly unrelated to any Manville claims. Moreover, clearly, due to the overlap of fiduciaries, the Manville suspension of Mandelbrot and Beneficiary claims is corrupt, through collusion and fraud. 5 There is no justification, nor are the Trustees and Garelick within their authority to suspend Mandelbrot and hundreds of claims based on an unrelated Thorpe case. The suspension of Mandelbrot is clearly in bad faith and due to Trustee fraud. 4 Critical to note - The very same Alan R. Brayton is the Chairman of the Trust Advisory Committee of the Thorpe Trusts (and clearly a Fiduciary to the Beneficiaries to both Trusts). Mandelbrot complaints in 2011 to Thorpe Trustees and Fiduciaries relating to Brayton s clear fraud (Kananian, and other Thorpe-related Trust fraud unquestionably led to the Thorpe cases against Attorney Mandelbrot and the suspension which is subject of this Objection. Had the Manville Trustees and Garelick properly reported Brayton s criminal conduct in the filing of the Kananian Manville claim in 2006 (as required under Department of Justice, Chapter 11 Trustee Rules and discussed herein), Brayton s removal as Thorpe Trust fiduciary would have been mandatory. As stated, Garelick and the Trustees, by concealing and failing to reports Brayton s Manville claim fraud to this Court, continue to collude in bad faith and have committed criminal fraud in every Annual Report since the discovery of the Kananian claim. 5 Steven Kazan, a Manville Asbestos Claimants Committee Member (and Fiduciary) is partners at plaintiff asbestos law firm Kazan McClain with David McClain. Kazan, a competitor of Mandelbrot s representing plaintiffs filed a wholly fraudulent California State Bar Complaint against Mandelbrot in The Complaint was immediately dismissed by the State Bar due to it having no merit. Kazan, in conjunction with his partner McClain have had it out for Mandelbrot for years. McClain (who has also acted in bad faith) is on the Trust Advisory Committee of the Thorpe Trusts with Alan R. Brayton and helped spearhead the Thorpe cases against Mandelbrot. 4

6 Pg 6 of 97 II. TRUSTEE AND GARELICK FAVORITISM, THE CONCEALMENT OF BRAYTON CONDUCT AND THE SUSPENSION OF MANDELBROT LEAD TO CRIMINAL CONDUCT From the Trustees response, it is clear that Garelick and the Manville Trustees have not read the Department of Justice, Chapter 11, Trustee Handbook related to criminal conduct published March See portions attached as Exhibit D. Had Garelick and the Trustees read these rules (which certainly would be expected of Fiduciaries), they would clearly know they ve engaged in criminal conduct. 18 U.S.C. Section 152 makes it a crime for any individual to knowingly and fraudulently make a false proof of claim (as Brayton did in Kananian per the Judge s Order); Receive a material amount of property from the debtor with intent defeat the Bankruptcy code (as Brayton did in Kananian); And to transfer or conceal property with intent to defeat the Bankruptcy Code (as Brayton and the Trustees did in Kananian). See Exhibit D, pages Moreover, 18 U.S.C. Section 3057 requires a Trustee to report suspected violations of federal criminal law to the appropriate United States Trustee (emphasis added). Garelick and the Trustees never reported Brayton s fraudulent and fictional Kananian claim paid by the Manville Trust which clearly violated Chapter 11 rules relating to the Trustees Duty to Report Criminal Conduct. As a result, Garelick and the Trustees also committed crimes under Section 152 by making a false oath or account in relation to a bankruptcy case (every Trustee accounting since the Kananian discovery) and making a false declaration in relation to a bankruptcy case (omitting Brayton s fraudulent claim). Garelick and the Trustees have also criminally violated Sections 153 and 154 specifically directed at Trustees who engage in the knowing and fraudulent misappropriation and transfer of property by the trustee or other office of the court (again, related to Kananian). 5

7 Pg 7 of 97 Criminal violations of Section 152 by Garelick, Trustees and Brayton in the concealment of the Kananian claim are undeniable. No Trustees Accounting has ever notified this Court of this criminal conduct (and favoritism) despite the Trustees and Garelick s knowledge thereof. 6 This shows a clear favoritism. The Trust cannot point to one Manville unreliable claim ever filed by Mandelbrot and he is suspended. To the contrary, Brayton (even today) is the largest Manville claimant and is a known filer of fictional Manville claims. How is this not favoritism? III. MANDELBROT INVESTIGATION AND REPORTING TO AUTHORITIES LED TO THE FELONY CONVICTION OF JOHN LYNCH DUE TO HIS SUCCESSFUL FILING OF A FRAUDULENT MANVILLE TRUST BANKRUPTCY CLAIM GARELICK AND THE TRUSTEES ATTEMPT TO CONCEAL THE SAME FROM THIS COURT Clear factual support exists for the statement that Mandelbrot is the most honest plaintiff s asbestos attorney in the Country. On September 28, 2012, after an extensive investigation by Mandelbrot, Mandelbrot reported to the Manville Trust, and every Trust in the Country, a criminally fraudulent claim paid by the Manville Trust to a former bankruptcy Trust employee John Lynch, who also worked briefly for the Mandelbrot office. See Exhibit F. Mandelbrot also made complete reports to Federal and Local authorities (while Garelick did nothing). Garelick and the Trustees concealed these facts in the Trustees Accounting provided to this Court Lynch was convicted of Felony Theft and Felony Fraud in Sonoma County in June 2015 and is currently serving 9 months in jail. Lynch has also been ordered to pay restitution to the Manville Trust of over $20,000. In addition, the potential savings to the Manville Trust (in stopping similar fraudulent claims by others) totals millions. The entire Lynch matter, despite Garelick and the Trustees duty to 6 In , at the time the Kananian claim was made public in Judge Harry Hanna s scathing Order, dozens of articles appeared in legal newspapers and on the internet with headlines such as Judge Bans Asbestos Attorney and Double Dippers -- with most every article (and the Order) specifically referencing Brayton and the Manville claim while indicating Brayton submitted false claims to an asbestos trust. See Exhibit E. 6

8 Pg 8 of 97 report the same to this Court and the U.S. Trustee. See Exhibit D. The Lynch fraudulent Manville claim and false proof of claim in violation of Section 152 has also been criminally concealed by Garelick and Trustees since 2012 despite the duty to report. Did Garelick or any Trustee even bother to show up at the Lynch sentencing in June 2015? Of course not. Did Mandelbrot? Yes and Mandelbrot gave a sworn statement for over half an hour. See Exhibit G. IV. MISAPPROPRIATION OF TRUST FUNDS GARELICK, RUBENSTEIN AND EXCESSIVE TRUST BILLING Any Professional Fees related to the Trustees corrupt suspension of Mandelbrot is a misappropriation of Trust Funds. While the Trustees and Garelick state that the amount is only around $12,000, no documentary support is provided. Moreover, Garelick then attempts to mislead the Court into believing that the excessive Professional Fees during the Accounting period were related to the payment percentage increase without providing any supporting documentary records for the same. V. CONCLUSION Mandelbrot and Trust Beneficiaries have been harmed by both the corrupt suspension of Mandelbrot Manville Trust claims and the criminal concealment and favoritism by Garelick and Trustees before this Court. Evidence clearly supports the fact Mandelbrot is one of the most reliable attorneys in the Country and the Trustees and Garelick s suspension of Mandelbrot and hundreds of Beneficiary claims is clearly corrupt, collusive and demonstrates bad faith. The Trustees state that they are well within their authority to suspend Mandelbrot, but provide absolutely no evidence of same. In addition, as shown above, Garelick and the Trustees have violated multiple section of the Bankruptcy Code relating to Mandelbrot, the Kananian claim, and John Lynch. 7

9 Pg 9 of 97 Respectfully, the Objection of Mandelbrot, individually and on behalf of Beneficiaries, is well grounded in all respects and should be granted and any Order provided by Garelick and the Trustees should be denied. Dated: July 13, 2015 /s/_michael Mandelbrot MICHAEL J. MANDELBROT Attorney for Beneficiaries 8

10 Pg 10 of 97 Exhibits

11 Pg 11 of 97 Exhibit A, Page 1

45 Pg 45 of MICHAEL J. MANDELBROT, ESQ. (CSB# ) Mandelbrot Law Firm 505 San Marin Drive, Suite 200 Novato, CA Phone:(415) Fax: (415) Defendants Pro Se In re J.T. THORPE, INC., THORPE INSULATION COMPANY, Debtors J.T. THORPE SETTLEMENT TRUST, THORPE INSULATION COMPANY ASBESTOS SETTLEMENT TRUST, vs. Plaintiffs, MICHAEL J. MANDELBROT and THE MANDELBROT LAW FIRM, Defendants. UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Chapter 11 Case No BB Adversary Case No. 2:12-ap BB Case No BB Adversary Case No. 2:12-ap BB DEFENDANT MICHAEL J. MANDELBROT, d.b.a., MANDELBROT LAW FIRM S OPPOSITION TO THE PLAINTIFFS MOTION TO ENFORCE JANUARY 23, 2014, SETTLEMENT AGREEMENT, AND CROSS-REQUEST FOR AWARD OF ATTORNEYS FEES AND COSTS Date: March 27, 2014 Time: 10:30 a.m. Place: Courtroom E. Temple St., 14th Floor Los Angeles, CA Judge: Honorable Sheri Bluebond DECLARATION OF MICHAEL J. MANDELBROT, IN SUPPORT 28 DEFENDANT S OPPOSITION TO THE PLAINTIFFS MOTION TO ENFORCE AGREEMENT Exhibit B, Page 1

46 Pg 46 of 97 Exhibit B, Page 2

65 Pg 65 of 97 Exhibit C, Page 1

70 Pg 70 of 97 United States Trustee Program Chapter 11 Trustee Handbook Bankr. P. 2003(e). Finally, the United States Trustee may call a special meeting of creditors on request of a party in interest or on the United States Trustee s own initiative. Fed. R. Bankr. P. 2003(f). If a chapter 11 trustee is appointed prior to the conclusion of the 341 meeting of creditors, the chapter 11 trustee has an immediate opportunity to conduct an examination of the debtor or the debtor s principals, under oath, at the creditors meeting. If, however, the trustee is appointed after the 341 meeting has been concluded, the trustee may request that the United States Trustee convene a special meeting of creditors. See Fed. R. Bankr. P. 2003(f). In addition, the trustee should carefully review the recordings of all meetings conducted prior to the trustee s appointment. Alternatively, the trustee may seek court approval to examine the debtor, or any other entity, pursuant to Bankruptcy Rule See Fed. R. Bankr. P A Rule 2004 examination may relate only to the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor s estate, or to the debtor s right to a discharge... [or] to the operation of any business and the desirability of its continuance, the source of any money or property acquired or to be acquired by the debtor for purposes of consummating a plan and the consideration given or offered therefor, and any other matter relevant to the case or to the formulation of a plan. Fed. R. Bankr. P. 2004(b). D. CONTROL AND PRESERVATION OF PROPERTY Upon court approval of the trustee appointment, it is imperative that the chapter 11 trustee secure the assets of the estate. The trustee must immediately assume control of all bank accounts held in the name of the debtor, whether or not they are designated as debtor in possession accounts, see Chapter 7, infra; identify, secure, and ascertain the value of the assets of the estate; review and implement internal controls of an operating debtor to safeguard assets; obtain and/or maintain adequate and appropriate insurance coverages, see Chapter 7, infra; and determine whether the initial bond set by the United States Trustee is sufficient to protect the estate against loss. See Chapter 3, supra. Monitoring insurance and bond coverage is an ongoing duty of the trustee. If a loss occurs as a result of a trustee s failure to ensure or otherwise protect property of the estate, the trustee could be liable. E. BANKRUPTCY CRIMES Chapter 11 trustees are often appointed after a judicial finding of cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case. 11 U.S.C. 1104(a)(1). After the trustee assumes control of the debtor, it is the trustee s duty to investigate the affairs of the debtor and the status of the case. See 11 U.S.C. 1106(a)(3). To the extent that the trustee either May 2004 Page 21 Exhibit D, Page 1

71 Pg 71 of 97 United States Trustee Program Chapter 11 Trustee Handbook discovers or verifies the existence of fraudulent activity, the trustee should notify the United States Trustee immediately. 1. Duty to Report Criminal Conduct Unless a judge or receiver has already made such report, 18 U.S.C requires a trustee to report suspected violations of federal criminal law to the appropriate United States Attorney. Section 586 of title 28 imposes a similar duty on the United States Trustee to refer any matter that may constitute a violation of criminal law to the United States Attorney and, upon request, to assist the United States Attorney in prosecuting the matter. 28 U.S.C. 586(a)(3)(F). A chapter 11 trustee should coordinate efforts with the United States Trustee in the criminal referral process. As noted above, if the trustee has reasonable grounds to believe that a crime has been committed, the trustee is required to refer the matter to the United States Attorney. 18 U.S.C. 3057(a). However, depending on local practice, the trustee should either submit the referral through the United States Trustee or provide a copy of the referral to the United States Trustee. The mechanics of the actual referral should be discussed with the United States Trustee, the Assistant United States Trustee, or the Regional Criminal Coordinator for the Criminal Enforcement Unit, as they have developed specific procedures with the local offices of the United States Attorney and the Federal Bureau of Investigation. In making a criminal referral, it is important to provide specific factual and documentary information. At a minimum, the referral should include: the bankruptcy case name, file number, and chapter; a chronological summary, including dates and specific facts related to the who, what, where, when, and how of the suspected crime; a brief narrative of what occurred in relation to each allegation, referring to copies of relevant documents; an estimate of the amount of loss involved; names, addresses, phone numbers, titles, and descriptions of likely witnesses; copies of all written documents relevant to the allegations; and a statement of other related referrals made to law enforcement agencies. 2. Types of Criminal Conduct The most common bankruptcy crimes are set forth in 18 U.S.C Section 152 makes it a crime for any individual to knowingly and fraudulently (1) conceal property of the estate; (2) make a false oath or account in relation to a bankruptcy case; (3) make a false declaration, certification, verification, or statement in relation to a bankruptcy case; (4) make a false proof of claim; (5) receive a material amount of property from the debtor with intent to defeat the Bankruptcy Code; (6) give, offer, receive, or attempt to obtain money, property, reward, or May 2004 Page 22 Exhibit D, Page 2

72 Pg 72 of 97 United States Trustee Program Chapter 11 Trustee Handbook advantage for acting or forbearing to act in a bankruptcy case; (7) transfer or conceal property with the intent to defeat the Bankruptcy Code; (8) conceal, destroy, mutilate, or falsify documents relating to the debtor s property or affairs; or (9) withhold documents related to the debtor s property or financial affairs from a trustee or other officer of the court. 18 U.S.C Persons other than the debtor, the debtor s principals, or the debtor s management may commit bankruptcy crimes. For example, a chapter 11 trustee may discover potential theft or embezzlement by professionals employed by the debtor, or by the debtor s employees. Sections 153 and 154 of title 18 are specifically directed to trustees and other officers of the court. Section 153 relates to the knowing and fraudulent misappropriation, embezzlement, or transfer of property, or destruction of any estate document, by the trustee or other officer of the court. The Bankruptcy Reform Act of 1994, Pub. L , 108 Stat. 4106, 4139 (1994), broadened the scope of those affected by this statute to include an agent, employee, or other person engaged by the trustee or officer of the court. Section 154 of title 18 prohibits a trustee or other officer of the court from knowingly purchasing, directly or indirectly, any property of the estate of which such person is a trustee or officer; or from knowingly refusing to permit a reasonable opportunity for the inspection of estate documents or accounts when directed by the court to do so. It also specifically identifies the United States Trustee as the only party in interest who does not require a court order directing the trustee or court officer to permit a reasonable opportunity for inspection. 18 U.S.C. 154(3). Section 155 of title 18 makes it a crime for any party in interest or its attorney to knowingly and fraudulently enter into an agreement with another party in interest or its attorney, for the purpose of fixing the fee or compensation to be paid them for services rendered in connection therewith, from assets of the estate. 18 U.S.C The Bankruptcy Reform Act of 1994 added 18 U.S.C. 156, Knowing Disregard of Bankruptcy Law or Rule, and 18 U.S.C. 157, Bankruptcy Fraud. See Pub. L , 108 Stat. 4106, 4140 (1994). Section 156 makes it a misdemeanor if a bankruptcy case or related proceeding is dismissed because of a knowing attempt by a bankruptcy petition preparer in any manner to disregard the requirements of the Bankruptcy Code or the Federal Bankruptcy Rules. 18 U.S.C The term bankruptcy petition preparer does not include the debtor s attorney or an employee of the debtor s attorney, but applies to a person who prepares for compensation a document for filing by a debtor in bankruptcy court or district court. 11 U.S.C. 110(a). May 2004 Page 23 Exhibit D, Page 3

73 Pg 73 of 97 United States Trustee Program Chapter 11 Trustee Handbook Section 157 is similar to the federal mail fraud and wire fraud statutes in that it requires a person to devise or intend to devise a scheme or artifice to defraud. A person, not only a debtor, commits bankruptcy fraud if, for the purpose of executing or concealing this scheme or artifice to defraud, that person: (1) files a petition under title 11; (2) files a document in a proceeding under title 11; or (3) makes a false or fraudulent representation, claim, or promise concerning or in relation to a proceeding under title 11, at any time before or after the filing of the petition, or in relation to a proceeding falsely asserted to be pending under such title. See 18 U.S.C If a person falsely claims to be in bankruptcy, this is a violation of 157. Further, the Sarbanes-Oxley Act of 2002, Pub. L , 116 Stat. 745 (2000), added 18 U.S.C. 1519, making the destruction, alteration, or falsification of records in federal investigations and bankruptcy a felony. Under 1519, Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both. 18 U.S.C There are several other criminal statutes that may be relevant to bankruptcy crimes including those relating to bank fraud, tax fraud, mail and wire fraud, and money laundering. May 2004 Page 24 Exhibit D, Page 4

74 Pg 74 of 97 EXHIBIT G Various Newspaper Articles ( ) regarding Alan Brayton Fraud in the Kananian Case and Western Claim Exhibit E, Page 1

75 Pg 75 of 97 Exhibit E, Page 2