Senator John Cornyn of Texas is on the Judiciary Committee and reflected upon the book by the UCLA Law Professor Lynn LoPucki “Courting Disaster” - How Competition for Big Cases is Corrupting the Bankruptcy Courts.

            Of the many reflections by Senator Cornyn the most direct remarks are Senator Cornyn states, in an obvious diplomatic manner, where decorum always seems to be utilized in an effort to soft dance upon corruption as a delicate issue;

            “Of course, no one wants to believe that a federal judge would ever distort the law for any reason, let alone in order to improve the court’s docket”. 

            At the same time Senator Cornyn stated in the Legal Times, (June 6, 2005), article that the facts are what they are; as Senator Cornyn remarked;

            “After all, picking a judge isn’t far from picking the verdict. What’s more, if debtor’s get to pick the jurisdiction, then bankruptcy courts have a disturbing incentive to compete with each other for major bankruptcy cases, by tilting their rulings in favor of corporate debtors and their attorneys.”

             As anyone can clearly see, even Senators, scholars and Congress is aware that unchecked systems can result in extreme chaos that is detrimental to the good order of society. Our police must be policed to assure that anarchy, cronyism and corruption does not become the way the system “really” works, for the sake of the intergrity, civility and propriety of the judicial process.

            Below, you will see profuse acts of the refusal to prosecute and how such a refusal has corrupted the Delaware Federal Justice system to the point where American Taxpayer dollars are being expended to defend Organized Criminal activities in order to bury any investigation into the “bankruptcy ring” of Delaware that is managed by the MNAT law firm.

1)      Fall of 2004 Laser Steven Haas (“Laser”) provided proof overwhelming & incontrovertibly of Perjury and Fraud

2)      December 22, 2004 an Emergency Hearing occurred in Delaware Federal Court

3)      The US Trustee’s replaced the Region 3 Trustee, Roberta DeAngelis with a Press release Dec 22, 2004 ( here ).

4)      The Court Ordered responses to the allegations to occur Jan 25, 2005

5)      The respondents TBF, Barry Gold & MNAT, having no choice, being caught “red-handed” - simply confessed.

6)      Feb 1, 2005 a hearing occurred to address the responses where the Court granted the highly unusual request of the "pro se" parties of Laser and the eToys shareholders permission to depose MNAT, TBF and Barry Gold.

7)      The depositions occurred Feb 9, 2005 at the Delaware Federal Court house as a safety protocol because both Laser and the shareholders had been threatened. The parties again admitted to deceiving the Court by false affidavits. This type of behavior is Fraud upon the Court, by Officers of the Court, who supplied more than 34 false affidavits to hide their felony violations.

8)      The Asst US Trustee Frank Perch then emailed out the Disgorge Motion against the TBF law firm for $1.6 million on Feb 15, 2005. Despite the fact that both TBF and MNAT had confessed to supplying false affidavits and deceiving the Court the Disgorge Motion only address the TBF law firm.

9)      Laser Haas had received an email from the Director of the US Trustee’s, Mr. Lawrence Friedman, who promised to remedy the situation.  Director Friedman was totally briefed upon all of the criminality.

10) Feb 24, 2005, less than ten (10) days after the Disgorge Motion, the Dept of Justice Attorney, Mark Kenney, signed the Stipulation to Settle that granted unlawful, implied, blanket, immunity to the TBF Law firm. Again the Dept of Justice personnel in Delaware coyly neglected to mention anything about MNAT.

11) Despite the fact that both MNAT and TBF had confessed to felony violations, that included the "Planting" of a paid associate of the TBF law firm within eToys as CEO (Mr. Barry Gold) - where the parties - in essence - nefariously seized control of the eToys Debtor completely, the Dept of Justice UST refused to do its job and Notify & Refer the matter to the US Attorney for prosecution as is required by 28 USC 586(a)(3)(F).

12) The Chief Justice was briefed on the case during a full day hearing on March 1, 2005.

13)  The Judge, Mary F Walrath (MFW) refused to allow Laser’s evidence into the record and forbade him from speaking during the daylong hearing as Haas had discovered that MNAT had also never, even to this very day, disclosed the fact that MNAT represents Bain and Bain affiliated issues, owners and companies. The germane issue being that eToys sold the bulk of its assets to Bain/ KB for discounts in the tens of millions of dollars. This is Collusion to Defraud an Estate by MNAT!

14) During the March 1, 2005 hearing Paul Traub of the TBF law firm confessed that his firm paid Barry Gold four (4) separate payments of $30,000 each from Jan to May 2001.

15) Paul Traub and Barry Gold had also confessed that the payments ceased in May 2001 as Barry Gold was then placed within eToys, secretly, May 21, 2001 where Barry Gold received $40,000 per month from eToys instead of TBF.

16) Laser was taken aback by both the Stipulation to Settle illegal immunity and the Court’s Order to strike and expunge Laser Haas, who was the owner of the Court approved liquidation consultant for eToys.

17) Researching why Mark Kenney of the DOJ would sign the unlawful Stipulation to Settle – why be so flagrantly act contrary the law in writing, led to the discovery of many serious felony violations, including Collusion in two separate cases involving another $100 million dollar cash fraud endeavor of TBF, Barry Gold and MNAT.

18) When Laser Haas reported the crimes to Director Friedman as well as the FBI, SEC, Public Integrity Section ,etc –  Director Friedman of the US Trustee’s Executive Office in Washington DC  resigned ( here ).

19) The Asst US Trustee resigned as well, being replaced by Andrew Vara.

20) Chief Justice MFW then handed off the Court approved work of Haas/ CLI - worth more than $3 million dollar as a senior claim of CLI (Laser Haas’s company) - without any explanation to visiting justice Judge Randolph Baxter.

21) Laser again complained to everyone he could, as it was readily apparent that the Delaware Federal system of Justice was protecting MNAT. Laser was instructed to refer his complaint to the Local US Attorney and the General Counsel of the US Trustee’s Executive Office in Washington DC.

22) Laser has now belatedly discovered that Roberta DeAngelis, the removed Region 3 Trustee, was promoted to the post of General Counsel after Director Lawrence Friedman resigned. DeAngelis was in charge of investigating herself ( here ).

23) Also discovered long after March 2001 is the now published fact by the US DOJ Office of Legal Policy Resume of Colm F Connolly, the Delaware US Attorney where it documents that Colm Connolly was a partner with MNAT in 2001 ( here)

24) Judge Baxter also refused evidence byt Laser Haas and his company CLI, including the Chairman of the Creditors Committee Affidavits documenting Fraud upon him by TBF and Barry Gold. 

25) Judge Baxter then rescheduled the hearing on the $3 million dollar Senior Priority Admin claim of CLI and Haas.

26) Judge Baxter then Ordered that the attorneys for CLI and Haas could withdraw.

27) Judge Baxter also threatened Laser Haas that if he put any more paper proofs in the Court record he would be sanctioned. Haas had already received email threats from his attorney for CLI, Henry Heiman, that Susan Balaschak of TBF warned Haas to "back off" or not only would Haas and CLI not get paid, that Haas's career would suffer and additional retaliations would occur.

28) Then Laser Haas helped the Wall Street Journal do a Story on it all ( here ).

29) Then Judge Baxter held a hearing in August 2005 where Judge Baxter denied “due process” & ordered that the new attorney for CLI and Haas could not speak the very day that Judge Baxter did strike and expunge Haas and CLI with prejudice.

30) Judge Baxter than issued an Order with “A to X” reasons why Laser and CLI would be stricken and expunged “with prejudice” from the case.

31) Judge Baxter’s many bogus reflections from A to X included the remark that Laser Haas and CLI failed to effort to prosecute the case. - (It seems that even the Court is not without its own sense of humor).

32) Haas appealed the erroneous ruling in September 2005.

33) Then Chief Justice MFW issued an Opinion and Corresponding Order October 4, 2005 that approved the unlawful Stipulation to Settle ( here ).

34) Judge MFW stated, despite the confessions to 34 false affidavits, that there was no Perjury documented. This is Absurd - TBF & MNAT had confessed to supplying false affidavits and deceiving the Court. The Bankruptcy FBI and US Trustee sting operations of Silver Screen or Truth or Consequences touted prosecutions for not declaring a mothers SS checks (special note) and failure to declare RV's etc. - Whereas eToys has $300 million in fraudulent transactions and 34 acts of perjury admitted and the authorities refuse to even mention the name of MNAT.

35) Judge MFW also stated that she refused to Notify & Refer the matter to the US Attorney. The Court is commanded by Law, 18 USC 3057(a) to Notify & Refer; it is not discretionary - it is a commandment!

36) Laser and the eToys shareholders both appealed the bogus ruling of MFW in Oct 2005.

37) The Clerk of the Delaware Court refused to Transmit the appeal

38) Judge MFW then held an illegal hearing Dec 1, 2005 to rule on whether or not to let the appeal issues and records to go forward.

39) Both Laser and the shareholders had been threatened of their lives and Haas called the FBI in Baltimore who had US Marshals at the DEC 1 hearing.

40) Then Judge MFW immediately transmitted the appeal.

41) Judge MFW refused Laser Haas request to hold a hearing on Recusal of Judge under Rule 5004.

42) Judge MFW also refused Laser’s request for a hearing on the Failure of US Trustee under Rule 2020.

43) The Delaware Court’s also refused repeated requests of Rule 2004 to review books n records

44) Judge MFW had speciously approved the Order of the Destruction of Books n Records.

45) All four appeals of Laser Haas, the shareholders and even the MNAT law firms appeal was heard by one justice, Judge Kent A Jordan of the Delaware Dist Ct. - This violated the doctrine Wheel of Assignments

46) Judge Jordan dismissed Laser's appeal with no comments and a one sentence remark "As per the items discussed during the hearing -"..

47) Judge Jordan (KAJ) merged the eToys shareholder appeal with the MNAT appeal.

48) Judge KAJ refused all of Laser Haas’s appeal requests, despite the fact that Judge Jordan told Haas he had read his brief and wanted Laser to be aware he had done so.

49) Judge KAJ held a strange hearing Oct 2006 and Ordered that every attorney be present.

50) During the Oct 2006 hearing KAJ granted eToys shareholder Alber permission for extended time to file his appeal brief and warned the attorneys they were in peril.

51) Judge KAJ also granted Alber advanced permission that he could seek additional time to file his brief if needed.

52) Then Judge KAJ was promoted off the case to the 3 rd Circuit Court.

53) Dec 2006 Alber had undergone brain surgery.

54) Jan 5, 2007 a Magistrate Justice, having no authority over the case, as an Order stated Magistrates could not handle Judge KAJ bankruptcy matters – the Magistrate defied the Law and the Order and issued a shotgun Order against Alber.

55) The Order by Magistrate Thynge was signed Jan 5 2007, post marked Jan 9 2007 and received by Alber Jan 11, 2007 while he was still recovering from brain surgery.

56) When Alber sent his brief in that was Ordered by Judge Thynge the Clerk again refused to place the Brief into the record until Alber sent one to Laser Haas.

57) The MNAT contingents never serviced Laser Haas.

58) The US Trustee never serviced Laser either.

59) Then, a new Judge, Dist Court Justice Sue L Robinson, without holding any hearing and ignoring the fact that Judge KAJ had stipulated that Alber could have additional time – Judge Robinson dismissed Alber with Prejudice.

60) Both Laser and Alber in several 3 rd Circuit appeal cases tried to address the issues, however, similar to the DeAngelis and Colm F Connolly issues Laser did not know that US Attorney  Colm F Connolly had clerked for 3 rd Circuit Court Justice Walter K Stapleton.

61) It is not know if Judge Stapleton is related to US Trustee Kelly Stapleton, when Laser Haas asked the question US Trustee Stapleton resigned ( here )

62) Also, Laser has now learned that Judge Walter K Stapleton was also a partner of the MNAT law firm.

63) MNAT is one of the oldest law firms in DE or the Country (75 years)

64) Laser Haas filed an Official 18 USC 3057(a) and 18 USC 3771 Complaint(s) (here) with the CA US Attorney over Colm F Connolly’s partnership with MNAT (here) not being disclosed and Mark Kenney’s illegal Stipulation to Settle granting immunity to the TBF law firm while the DOJ in DE refuses to prosecute MNAT.

65) When Haas reported all this to the CA US Attorney Public Corruption Unit the US Attorney Tom O’Brien shut down the Unit and threatened career prosecutors as O’Brien and AG Mukasey stated to the Press that the dismantling of the Unit was to make the DOJ more efficient ( see here and here ).

66)  Senator Feinstein, being upset at the bogus excuse for the dismantling of the Public Corruption Unit sent a letter to AG Mukasey asking him to explain the decision to close the Public Corruption Task Force ( here ).

67) These many perversions of justice, in no small part, due to the Delaware arrogance over its Corporate Dominance, is fostering the need for Congressional hearings into Delaware ( WSJ Law Blog comments here ).

68) Senator Joe Biden has sent back – refusing to sign and leaving it blank - the Blue Slip that is necessary for the Confirmation of Colm F Connolly to be a Federal Justice ( see related story here ).

69) Bankruptcy Judge Judith Fitzgerald became informed of another case where the DOJ US Trustee’s were refusing to do their job as Judge Fitzgerald reflected that the Justice Dept silence aided Fraud as she also remarked “What on earth is going on with the Dept of Justice ”? ( see here ).

70) Mary F Powers a Dept of Justice Attorney who worked for Florida, in the same manner as Mark Kenney for Delaware remarked in a statement to the Congressional Subcommittee on Administrative Law that Director Friedman and his successor Director White have done very little to protect the integrity of the US Trustee Program.

71) During that same Congressional Hearing, Federal Justice Jay A Cristol remarked that the US Trustee Program had become a “pack of dogs” ( see here ).

72) The Dept of Justice cronyism, corruption and perversions of justice, in order to protect the MNAT law firm from prosecution is so strong the DOJ has five parties on the 3rd Circuit Appeal brief in case 07-2360 stating falsely that Laser Haas is Not a party to this case and the court should expunge the appeal of the eToys shareholder as without merit. This is Perjury and Obstruction of Justice by the US Trustee's office in DE and Washington DC.

73) The 3rd Circuit appeal by the US Trustee Mark Kenney, Stapleton, Andrew Vara and Roberta DeAngelis states much hyperbole as the US Trustee’ participants engage in banter and falsehoods reflecting that Laser and Alber have failed to prosecute the case, while the DOJ is an appellee with MNAT - defending the right to provide the illegitimate Stipulation to Settle and its immunity.

74) Now Chief Justice MFW has stepped down, Region 3 Trustee Stapleton has stepped down and Roberta DeAngelis has speciously been sent back in as Acting Region 3 Trustee.

            Congress has designed the statutes of the Bankruptcy Code to level the playing field and assure equitable justice to everyone, every entity, large or small. The Code has safeguards that protect debtor and creditors rights equally. Finality transpires by fair treatment of all creditors, shareholders and all other parties of interest, who are forced, by Federal statutes to yield their rights to the Bankruptcy Code. When a bankruptcy occurs, only those of documented prowess who agree to supervision of the Court and affirm an oath of propriety are permitted to engage in working upon a bankruptcy matter. As such the work can be lucrative, but it also comes with the price of compliance to higher ethical standards.

            Upon receiving the cryptic approval of the Bankruptcy Court for destruction of books n records, the Executives abandoned the estate and the attorneys for both Creditor’s and Debtor in eToys collaborated in deceiving the Court by supplying false affidavits.

            The Code is specifically designed to keep the attorney’s hands out of the cookie jar of estate assets. Congress has long been aware that an unchecked bankruptcy system tends to work more for the benefit of wayward counsels than for creditors. There are many statutes to assure propriety. Including the definition of Disinterested Persons §101(14) where the parties have to affirm they are not connected to the case, to the owners of the entity and that they are “arms length” in their transactions with any other court approved functionary. This is to assure that hidden power centers may develop outside of the courts or Congressional authority.

            The Congressional statutes also require that all persons or entities that desire to be engaged as a Professional Person (entity or person) must supply an application of Professional Person per Section 327(a) that states they are disinterested and defines the scope of their duties. There can be no duplication of duties, so that the remaining, distressed assets of the estate are not swallowed up by the expense of the professionals in any arbitrary or duplicitous manner.

            Upon supplying the application, defining ones intended work area, the Code also requires a Rule 2014 affidavit where the party must state, “under penalty of perjury” that they are “arms length” in their transactions to assure good faith dealings. They also affirm they are “disinterested” persons and that they have “disclosed” all relevant issues to the Court so that it can make an informed decision. To put it succinctly an attorney must promise to keep their hands out of the cookie jar and that they are not ganging up to find a way to sneak around the judge’s auspice.

            The Court approved Law firm for the eToys bankruptcy 01-706 (the “Debtor”) (DE Bankr 2001), that being Morris Nichols Arsht & Tunnel (“MNAT”), along with the Court approved counsel for the Creditors, Traub Bonacquist & Fox (“TBF”) supplied their required affidavits stating that there was no “undisclosed” items and that they had no “conflicts of interest”.

            The MNAT law firm continues to this day, under the cloak of the Dept of Justice implied, blanket, immunity, to hide the fact that MNAT had an ongoing relationship with Bain associated parties. At the same time the TBF law firm and the new President/ CEO of eToys, Mr. Barry Gold both worked for the Stage Stores S Texas bankruptcy (S TX Bankr 00-35078), where Bain affiliated owners and the CEO of KB Toys was involved. The germane issue of that being that MNAT, TBF and Barry Gold negotiated the sale of their client eToys to their other “undisclosed” client Bain/ KB for tens of millions of discounts. This is collusion to defraud!

            Barry Gold was “planted” within eToys secretly and by bribery. The parties drafted a clandestine Hiring Letter in 2001 and did not reveal the Hiring Letter to the Court until January 25, 2005. Doing so then only in defensive response to the Emergency motions to address the fact that the TBF law firm and Barry Gold had both supplied oaths to the Court that they were not connected. Even the Hiring Letter itself is deceptive. It does not say Barry Gold, the paid party of the TBF law firm is now offered as President and CEO. Instead, every act the parties engaged upon, including the plan confirmation hearings, where the shareholders questioned Barry Gold on the stand in 2002, about possible connections of Mr. Gold to the TBF law firm. Every single instance the parties denied and inferred that they were not connected.

            If you go to the US Trustee website you will see the US Trustee program engaged in Fraud Task Forces such as Operation Silver Screen or Operation Truth or Consequences. At the Silver Screen report you will see the cases of a person who did not declare a snow mobile, another person had a bad check issue for $6,490.00, etc, etc.

            Making this case extensively more heinous, believe it or not such is possible, the Asst US Trustee testified in the Motion to Disgorge the TBF law firm for $1.6 million that the parties’ had engaged in discussions with the United States Trustee’s office about replacing key executives of the Debtor with persons the law firms desired to choose. The US Trustee stated, within the Motion to Disgorge, twice, the US Trustee’s concerns about replacing key personnel with parties connected to the retained professionals. They were warned, in advance, not to do so!

            All any honorable person need do is read the US Trustee Motion to Disgorge the TBF law firm for $1.6 million. It only addresses a few of the one hundred crimes no known to have transpired. Yet it stated that the violations were deliberate, rather than inadvertent. That the planting of Barry Gold was not accidental, as it was done by direct request of the TBF law firm and it concluded the Fraud upon the Court had occurred.

            The Disgorge Motion did effort leniency for the well-established colleagues. It stated erroneously, in the first footnote, that Barry Gold did not have to apply. This was a snow job upon Haas and the eToys shareholders for being layman. The Disgorge Motion also failed to seek the mandatory disqualification of the parties for failing to disclose; under the pretense that it was to long ago. Again, another effort to take advantage of the lack of legal knowledge of the parties by the Dept of Justice.

            The final nail in the coffin of that premise is the recent discovery of the previously undisclosed issue that the Senior Justice of the Circuit Court was a former partner of the MNAT law firm, where the Circuit Court picked the Chief Justice of the Bankruptcy Court and the United States Attorney for Delaware, now nominated to be the District Court Justice was also a partner with the MNAT law firm in 2001. When the fraud and perjury began in the eToys saga.

            It is obvious that extensively egregious crimes were committed. It is also clearly evident that they were intentional. Compounding the criminality is the corruption and cronyism of the refusal to prosecute and remedy. The parties that were caught red-handed are being let off with no more than a paltry slap on the wrist. And, if all that severally heinous activity was not enough the Delaware system of justice is punishing the whistle blower for pointing out the felony violations and rewarding the conflicted attorneys with the right to devour the $45 million in cash of the estate and letting the perpetrators control the outcome of the $500 million dollar NY Supreme Court case.

            Need we say anything else?