blix v ymc app # 98 | 12-35986 | flynn reply re osc
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IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NO. 12-35986
TIMOTHY L. BLIXSETH
Appellant,
v.
YELLOWSTONE MOUNTAIN CLUB, LLC
YELLOWSTONE DEVEOPMENT, LLCBIG SKY RIDGE, LLC
YELLOWSTONE CLUB CONSTRUCTION CO., LLC
Appellees.
MICHAEL J. FLYNN’S REPLY TO YCLT’S CROSS
HARBOR’S THE YELLOWSTONE MOUNTAIN CLUB’S THE
DEBTORS’ AND SUNRISE RIDGE’S RESPONSE TO THE
ORDER TO SHOW CAUSE
Appeal from the United States District Court for the District ofMontana
Case No. 2:11-73-BU-SEH
Michael J. FlynnOne Center Plaza, Suite 240
Boston, MA [email protected]
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Attorney Michael Flynn herewith replies to the YCLT’s, Cross
Harbor’s, the YMC’s, the debtors, and Sunrise Ridge’s Responses to the
Court’s order to show cause why Appellant and his attorneys should not
be sanctioned for filing the appeal in the disqualification matter. In
their Responses, the appellees have created evidentiary issues as to the
evidence I relied upon as an advocate for Mr. Blixseth in support of our
motion to disqualify Judge Kirscher and then our decision to seek
review in the Ninth Circuit. If these sanctions are upheld under these
circumstances, the Court will effectively chill any litigant’s right to
challenge a judge for bias while sweeping under the rug documents
forensically authenticated in which the central figure in the Montana
bankruptcy cases before Judge Kirscher admitted that the proceedings
were rigged. An abundance of supporting evidence relied upon by Mr.
Blixseth’s attorneys supports the same inescapable conclusion. The
Ninth Circuit can itself authenticate all of this evidence, as did the
Blixseth attorneys. Notably, the Chief Judge never addressed these two
documents in his dismissal of the judicial misconduct complaint.
Sanctions in this matter are themselves indicative of a failure to
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address these admissions, to disclose the emails of Judge Kirscher and
to intimidate Mr. Blixseth and his counsel into submission.
Mr. Flynn herewith adopts the arguments and briefing of his co-
counsel, and incorporates their positions herein as if fully stated. Mr.
Flynn also invokes F.R.A.P. 46(c) and Circuit Rule 46-2(d),(e) and
requests an evidentiary hearing as recited below. The purpose of this
Reply, as was the original Response to the OSC, is to present the facts
and the law as the undersigned analyzed them as an advocate for Mr.
Blixseth as trial counsel in AP 14 having actually observed Judge
Kirscher during the AP 14 trial. The appellees misconstruction of this
primary issue is demonstrated in their gratuitous, irrelevant, ad
hominem attacks on me and co-counsel. This should alert the Court to
their utter failure to address this critical issue in their Responses.
Given the Court’s order on the OSC presumably invoking its
“inherent power,” it is now plain to the undersigned after 44 years of
litigating in the federal court system that it is in a crisis. The law and
the rules are often not followed by a growing number of federal courts,
and, specifically, gross deviations from the rules and fundamental due
process, as occurred here, routinely occur in many bankruptcy courts,
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particularly in large money cases, of which this case is reportedly the
largest bankruptcy in Montana history. See LoPucki: “Courting Failure:
How Competition for Big Cases is Corrupting the Bankruptcy Courts.”
97-122 (2005). It is likely that the Supreme Court in Stern v Marshal
and Executive Benefits (In re Bellingham) is attempting to correct a run
away freight train of judicial corruption.
My 44 years of experience and my conscience tells me that I am
being sanctioned because I am exposing the systemic corruption now
commonly present in the bankruptcy system and rapidly gaining
District and Circuit Court acceptance.
Based on my analysis of the totality of the circumstances and the
documentary evidence, and my observations as trial counsel, it became
obvious in this case that there were such deviations from judicial
propriety as to suggest the corruption of the judicial process by the
assertion of “political pressure” in the Montana Bankruptcy Court –
which is exactly what one email states. (See Exhibit 1 to Flynn Dec.,
Dokt 78-2). Mr. Burkle’s approximately $1.5 million in “donations” and
meetings with the Montana Governor at the same time he and Mr.
Byrne were acquiring the Yellowstone Club (“YC”) and putting it into
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bankruptcy through collusion with Edra Blixseth, the hiring of Mr.
Patten – Judge Kirscher’s “best friend” who repeatedly engaged in what
I considered wholly improper ex parte communications, the remarkable
admissions of Edra Blixseth in two forensically authenticated
documents, the judicially sanctioned criminal conduct of Edra Blixseth,
all suggested gross deviations from the rules governing our system of
justice. It will now require independent jurists to correct this
demonstrable miscarriage of justice.
The rulings, orders and conduct by the Montana bankruptcy judge
and now by the Chief Judge, in my professional analysis, involves the
exercise of raw power in further deviation from the rules of
fundamental fairness; and the “scapegoating” of Mr. Blixseth and his
attorneys for seeking Judge Kirscher’s disqualification; and then
retaliating for seeking remedial assistance from the Judicial
Conference. My January 31, 2014 letter to the Judicial Conference
(Exhibit 7 to my Declaration, Dokt 78-9) recites the basic facts involving
Judge Kosinski’s holding the Judge Kirscher investigation in connection
with our judicial misconduct complaint “in abeyance.” This is directly
analogous to what Judge Kosinski did in connection with Judge Cebul
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and his “mootness” order, where he was subsequently ordered by the
Judicial Conference to make public Judge Cebul’s emails.
Here, the circumstances are far more serious than the Cebul
emails which did not involve a specific case. The Yellowstone Club and
Edra Blixseth bankruptcies involve allegations of judicial misconduct
directly impacting the distribution of a billion dollars in assets, and the
targeting of my client in an ex parte “deal” made at a hotel between
Judge Kirscher and my client’s adversaries. Yet, Judge Kosinski seeks
to sanction Mr. Blixseth and his lawyers for raising these issues, while
issuing an “abeyance” order on the judicial misconduct complaint which
directly concealed Judge Kirscher’s emails. These emails are at the
heart of the disqualification motion, the judicial misconduct complaint,
the reappointment of Judge Kirscher, and finally directly impact Judge
Kosinski’s sanctions order. It is plain from Judge Kosinski’s
involvement in the Judge Cebul case that it became a “political football”
in Montana and in the Circuit Court system. The Judge Kirscher
matters involve the same political forces. But here the issues and the
evidence are far more serious. Judge Kosinski’s attempt to stop the
disclosure of the Judge Cebul emails with “mootness,” subsequently
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rejected by the Judicial Conference, is benign compared to his orders on
these matters which include the suppression of the Kirscher emails in
the face of evidence that Judge Kirscher maintained an email account
with his prior law firm to whom he awarded $22 million with no trial;
and two forensically authenticated documents from Edra Blixseth to her
lawyer that the bankruptcy proceedings were rigged based on the
expenditure of “enormous capital and political favors” by Mr. Byrne,
Burkle and the Montana Governor. These facts mandated investigation
– not an “abeyance” issued by Chief Judge Kosinski.
The conundrum for me is that I have had to appeal these matters
to the very judges, Judge Kirscher and Judge Kosinski, who, pursuant
to my duties of advocacy, are exercising their powers without following
the rules. Thus, I am forced to challenge their judicial authority to
conduct these matters, thereby invoking their ire, anger and retaliation,
and the potential ire of their colleagues, which I believe has resulted in
the sanctions and a gross miscarriage of justice to my client and now to
his attorneys. Throw into this mix, the undisclosed relationships and
potential communications of Judge Kosinski’s wife, a former U.S.
Trustee within the federal bankruptcy system, and Judge Kosinski’s
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“abeyance” of the misconduct investigation, and this Court is confronted
with potential judicial manipulation to protect a colleague, which, under
the law, mandates the purest means of judicial independence and
review by the most untainted members of the Ninth Circuit. If this
Court is to uphold our system of justice, rather than making myself,
and my client and colleagues, sacrificial lambs under a false rubric of
upholding the law in order to conceal demonstrable judicial bias, it
should order the following:
1. Mr. Flynn respectfully requests the disqualification of Chief
Judge Kosinski on the following grounds: (a) his wife is a former U.S.
Trustee, and all communications that his wife has had on this matter
should be disclosed, and her emails produced; (b) in his position as
Chief Judge he was in charge of the Judicial Council misconduct
complaint against Judge Kirscher, and placed those proceedings “in
abeyance,” notwithstanding documented evidence of corruption,
thereby preventing the disclosure of bankruptcy Judge Kirscher’s
emails, as was required by the Judicial Conference regarding Judge
Cebul; (c) in his position as Chief Judge he was in charge of the
reappointment committee involving Judge Kirscher and sanctioned his
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reappointment after the expiration of the time mandated for
reappointment, and after staying the investigation into Judge
Kirscher’s conduct specifically involving the production of his emails,
thereby thwarting review by the Ninth Circuit of Judge Kirscher’s
communications; (d) he exercised the inherent powers of the Ninth
Circuit to sanction myself, Mr. Blixseth’s attorneys, and Mr. Blixseth
for filing the disqualification appeal but continually referencing “no
judicial misconduct,” thereby inserting into that appeal the matters
relating to reappointment and the judicial conduct complaint, and
effectively destroying Mr. Blixseth’s right to counsel and fundamental
right to be heard, all of which improperly influenced the disqualification
appeal; (e) Judge Kosinski displayed a lack of judicial propriety in the
oral argument proceedings on the disqualification appeal repeatedly
asserting to Mr. Flynn that there was “no judicial misconduct,” when
the applicable standard under review at that proceeding was
“appearance of bias,” thereby injecting into the appeal his positions
with the Judicial Council and the Reappointment Committee; (f) his
sanctions order smacks of overt retaliation for Mr. Blixseth and his
attorneys pursuing their lawful remedies with the Judicial Conference
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in connection with my letter dated January 31, 2014 attached as
Exhibit 7 (Dkt 78-9) to my Declaration filed in Response to the OSC; (g)
Judge Kosinski in an unfounded finding ruled that I have “smeared”
Judge Kirscher when all I have done is to expose his conduct within the
rules and filings with the appropriate federal agencies – I am not
responsible for what has appeared in any form of media other than
court and Public Integrity filings; (h) in an improper zeal to reappoint
Judge Kirscher, and absolve him of misconduct, Judge Kosinski ignored
the underlying facts in the disqualification appeal, more specifically
ignoring the remarkable admissions of the central figure, Edra Blixseth,
in these matters; and is now scapegoating Mr. Blixseth’s counsel,
thereby substituting his own bias on whether the facts and evidence
within the scope of our professional judgment acting as advocates for
our client warranted sanctions for our request for judicial review by the
Ninth Circuit of the disqualification matters .
2. With their filings, the appellees have injected scurrilous,
irrelevant, unfounded, blatantly false and/or misleading allegations
relating to me that should compel this Court to either strike their
briefing and exhibits or conduct an evidentiary hearing into the truth or
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falsity of the few relevant issues in their pleadings, including the
credibility of Edra Blixseth.
3. Mr. Flynn requests an evidentiary hearing into the
authenticity of the two documents I relied upon on the Edra Blixseth
computers, one of which she authenticated in a deposition, which
authentication by her I specifically relied upon. Specifically, I relied
upon the forensic examination of Mr. Whiteford who authenticated the
metadata on the documents at issue with the “time clock” on the Edra
Blixseth computer. I request that the Ninth Circuit use its forensic
expert to analyze the metadata; and that Mr. Whiteford be allowed to
testify on these matters; and that Edra Blixseth be compelled to appear.
See Whiteford Declaration attached as Exhibit 2 to Flynn Supp Dec.
The appellees failed to inform the Court that they have never sought
examination of the hard drives to challenge the authenticity of the
documents, nor have they ever responded to the specific facts
authenticating the documents recited in the Reply and the exhibits
attached to The Emergency Motion for a Stay. Instead, they rely upon
Ms. Blixseth’s credibility and attack her former partner – Mr.
Montgomery. Significantly, they have produced a document from Mr.
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Holahan allegedly not including the critical language I cited in my
Response. However, close examination of Mr. Holahan’s document
reveals a gap where the critical language does exist on the original
hardrive. See Flynn Supp Dec at Exhibit 1 attaching the Reply to the
Emergency Motion to Stay which is also at Dkt 56 in this appeal. Their
allegation that I am somehow in collusion with Mr. Montgomery is
absurd. I sought and received sanctions against him and his attorneys
and have hundreds of thousands in judgments against him. See
Montgomery v. Etreppid Techs ., 2009 U.S. Dist. LEXIS 35543
(U.S.D.NV); 2009 WL 910739 (U.S.D.NV).
I have scrutinized Mr. Montgomery’s statements on the two
documents and subjected the documents to forensic examination. I
considered his partnership relationship with Ms. Blixseth, his insider
knowledge, the chain of custody issues, and I relied upon the facts and
circumstances relating to the contents of the two documents, my
knowledge of Edra Blixseth’s collusion with Byrne and Burkle, the
demonstrably improper rulings of Judge Kirscher regarding her, the
intrinsic accuracy of the contents of the documents, and the forensic
examination to conclude that the documents are authentic. The
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appellees fantastical ruminations about what they claim I relied upon
in my professional analysis of the two documents should now be made
subject to an evidentiary hearing. Their reliance on Edra Blixseth’s
credibility is in itself an issue that any independent fact finder would
deem misplaced.
4. Mr. Flynn requests the production of all of Judge Kirschers
emails between November, 2008 and the present to be examined by an
independent referee appointed by the Ninth Circuit.
The appellees are correct that I have no “remorse” about my
appeal of the disqualification issues – but not out of any sense of self-
righteous ego driven compulsion to be “right.” I have been batted
around in enough courtrooms over the past 44 years to have very little
“ego” left on such matters. Rather, I know that my sworn duty is to
advocate for my client; and having been immersed in the facts and law
on these matters for 7 years, my professional judgment is that he is the
victim of injustice at the hands of manipulative greed-mongers with the
complicity of the bankruptcy court. To have remorse in these
circumstances would allow falsehood to triumph over fact, lies to
triumph over truth, and “evil” to triumph over good. I am enough of a
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believer in the morality of the law to still hope that after 44 years “in
the pit” there is such a thing as true justice.
CONCLUSION
Independent jurists on the Ninth Circuit must ask themselves if
ever in their careers have they seen such a collection of evidence
supporting judicial bias, let alone judicial corruption, buttressed by
admissions by the central figure in all of these proceedings, Edra
Blixseth, now reportedly receiving $70,000 PER MONTH from the
Yellowstone Club, stating that the proceedings were rigged, ie, “SB
[Sam Byrne] and BS [Brian Schweitzer] have spent enormous
capital
and political favors to ensure they get the right outcome
from the
Montana bankruptcy judge.”
May 1, 2014
/s/ Michael J. Flynn
Michael J. Flynn
Counsel for Mr. Blixseth
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CERTIFICATE OF COMPLIANCE
Pursuant to this Court’s Order to Show Cause, I certify that thisResponse is proportionally spaced in serif font (Century style), has a
typeface of 14 points, and contains 2,487 words, excluding the parts of
the brief exempted by Fed. R. App. P. 32. By consolidating the Replies
to both the YCLT and the Cross Harbor, Yellowstone Mountain Club,
Debtors, and Sunrise Ridge Responses, in this document, I am under
the word limit for a joint reply. This Brief was prepared using Microsoft
Word and the word court was determined using the Microsoft Word
word count application.
May 1, 2014 /s/ Michael J. Flynn
Michael J. Flynn
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PROOF OF SERVICE
I hereby certify that I electronically filed the foregoing with the Clerk of the Court
for the United States Court of Appeals for the Ninth Circuit by using the appellate
CM/ECF system on May 1, 2014.
Participants in the case who are registered CM/ECF users will be served by the
appellate CM/ECF system.
I further certify that the following individuals are not participants in this appeal but
will receive service of the foregoing as they are interested parties to this appeal. I
have mailed the foregoing document by First-Class Mail, postage prepaid, or have
dispatched it to a third party commercial carrier for delivery within 3 calendar days
to the following non-CM/ECF participants:
Evan R. Levy
George A. Zimmerman
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
May 1, 2014 /s/ Michael J. Flynn
Michael J. Flynn
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IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NO. 12-35986
TIMOTHY L. BLIXSETH
Appellant,
v.
YELLOWSTONE MOUNTAIN CLUB, LLC
YELLOWSTONE DEVEOPMENT, LLC
BIG SKY RIDGE, LLC
YELLOWSTONE CLUB CONSTRUCTION CO., LLC
Appellees.
SUPPLEMENTAL REPLY DECLARATION OF MICHAEL J
FLYNN IN SUPPORT OF RESPONSE TO ORDER TO SHOW
CAUSE
Appeal from the United States District Court for the District ofMontana
Case No. 2:11-73-BU-SEH
I, Michael J Flynn declare:
1. I have personal knowledge of the facts stated herein, and if calledas a witness, I could and would testify competently to them.
2. In their overreaching frenzy to attack Mr. Blixseth and myself in
their Responses, (itself indicative of their failure to address the relevant
Michael J. FlynnOne Center Plaza, Suite 240
Boston, MA [email protected]
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facts), the appellees conveniently misstate the essential issue in the
sanctions appeal, i.e. my professional assessment of the evidence and
the law to support the appeal of the denial of the Motion to Disqualify.
The issue is whether my assessment of the law and facts supporting the
“appearance of bias” was objectively reasonable to warrant appeal
thereby negating any lawful possibility of sanctions. The Chief Judge,
himself, in his zeal to protect Judge Kirscher, has misconstrued,
misapplied and convoluted this issue. The Chief Judge’s improper
miscegenation of the evidence and the law (“appearance of bias”) on the
disqualification appeal to impose sanctions based on Judge Kirscher’s
“misconduct,” which involves our requested investigation into Judge
Kirscher’s reappointment and misconduct complaints, which he deems
to be a “smearing” of Judge Kirscher, has exposed and placed at issue
the foundational and forensic evidence which I believed justified all of
our filings - the appeal on disqualification, the objection to
reappointment, and the misconduct complaint. Remarkably, the Chief
Judge failed to address this foundational and forensic evidence. I am
seeking an evidentiary hearing on this forensic evidence; and the
production of Judge Kirscher’s emails, which I requested in my January
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31, 2014 letter to the Judicial Conference. The Judge Kirscher emails
and the two Edra Blixseth documents, one of which she has already
authenticated - notwithstanding the appellees’ pitiable attempt to
disown it – are fundamental to my due process rights to defend against
these unjust sanctions. The appellees have placed these matters, and
the credibility of Edra Blixseth at issue along with the reasonableness
of my reliance on her admissions. Given the stated basis for the OSC, if
the Ninth Circuit deems my reliance reasonable in the totality of the
circumstances, including my reliance on the Edra Blixseth admissions,
it must in good conscience revoke the OSC. The overwhelming weight
of the evidence not only supports the reasonableness of the appeal, it
also supports disqualification itself, along with an investigation into all
matters raised in the judicial misconduct complaint.
3. The appellees resort to broad conclusions about “grand
conspiracies,” “remorse,” “this Court got it wrong,” my failure to include
on a pro hac application a sanction from 33 years ago; and that we
failed to inform this Court that the evidence “from the computer of
Blixseth’s ex-wife” is of “highly questionable credibility.” This latter
charge is itself a false red herring. There is and was no duty to inform
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this Court of the legitimacy of the two documents on Edra Blixseth’s
computers. The forensic evidence and Ms. Blixseth’s authentication
supports our positions in our adversarial system of justice. BUT,
appellees did have a duty to inform the Court that Ms. Blixseth has no
credibility, is a pathological liar, and defrauded banks and lenders of
over $50 million, all ignored by Judge Kirscher. The real credibility at
issue in connection with these sanction matters, is Edra Blixseth’s, Mr.
Byrne’s, Mr. Patten’s and the YCLT’s; and their failure to inform the
Court of the forensically demonstrative evidence establishing the
authenticity of the two documents at issue. The YCLT fails to inform
the Court that it has never had a forensic expert analyze the computers,
as we did; that both documents at issue exist in their forensically
provable form with unaltered metadata; that the chain of custody of the
computers containing these documents is established directly from Edra
Blixseth and her partner, Dennis Montgomery, to the expert, who has
verified the authenticity of the two documents based on forensically
demonstrative metadata. In order to misdirect the Court, the YCLT and
the appellees not only fail to inform the Court of Ms. Blixseth’s criminal
conduct, history of perjury, perjured/dismissed bar complaint against
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me, but also her relationship with her partner, Mr. Montgomery – to
whom she paid over $6 million for work now subject to a criminal
investigation. For a summary of Ms. Blixseth’s perjured and criminal
conduct, all ignored by Judge Kirscher, see Exhibit 1 attached hereto,
which is also Exhibit 1 to our Reply on the Emergency Motion to Stay,
included in this appeal at Dkt entry 56.
4. The documents exist in their unaltered form on Edra Blixseth
computers when Mr. Montgomery was her partner and she was paying
him $100,000 per month, regardless of all the Edra Blixseth / appellee
piteous attempts to now disown them. Her subsequent deposition
authentication confirmed one of the documents. THAT is what I relied
upon. Together with all of the other evidence, they support the
accuracy of her statements that the bankruptcy proceedings were
effectively rigged beyond a reasonable doubt. See my letter requesting a
criminal investigation, dated March 30, 2010, subsequently sent by
Judge Peterson to the U.S. Attorney, attached hereto as Exhibit 3. The
concept that I would rely upon Mr. Montgomery alone as argued by the
appellees, given our history, is absurd. The appellees cavalier disregard
for the forensic evidence, without their own examination, and
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subsequent reliance on the credibility of Edra Blixseth, is shameful;
smears my professional assessment of this evidence; and conceals the
underlying significance and impact of this evidence. Presumably, this
hard forensic evidence will not be ignored by this Court in its pursuit of
sanctions; and will result in the requested evidentiary hearing and the
appearance of Ms. Blixseth for cross examination.
5. The authenticity of the two documents was critical to my
determination that all issues regarding disqualification should be
pursued on appeal outside of Montana. Given Mr. Patten’s involvement
with Edra Blixseth as extensively recited in one of the documents , the
infamous Judge Peterson email to Mr. Patten giving Patten advice to
use against Mr. Blixseth, the emails between Mr. Patten and Judge
Kirscher’s law clerk giving Mr. Patten the ear of the court in this, the
largest bankruptcy in Montana history, the requested investigation into
the Worden Thane secret email account, held “in abeyance” by the Chief
Judge, when he also possessed the two Edra Blixseth admissions, and
the $1.5 million in donations to the Governor by the
Burkle/Byrne/Blixseth cabal; the emails between Mr. Byrne and his
cohorts evidencing admissions that they obtained the YC at a fraction of
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its value through a secret deal with Edra Blixseth made weeks before
she obtained the YC on August 12, 2008, and then 89 days later put it
into bankruptcy in the context of using “political pressure” in the
bankruptcy process, and meetings with the Montana Governor, and
financial data proving that Mr. Burkle – the recipient of the YC in
Judge Kirscher’s approved plan, paid the Governor almost $1.5 million
while the scheme to put the YC into bankruptcy was being
implemented, all of this evidence supports not only the authenticity of
the documents, but also the justification for appeal. I specifically
request the opportunity to present this evidence in an evidentiary
hearing to justify the reasonableness of our decision to appeal the
disqualification denial.
6. The Chief Judge disagrees with my assessment of the evidence
and disagrees with my advocacy and issued the OSC. Obviously, my
right to oppose the OSC supports my disagreement with his evaluation
of how I evaluated the evidence as an advocate for Mr. Blixseth.
However, although the Chief Judge repeatedly and improperly
referenced “judicial misconduct” in connection with the disqualification
appeal, apparently referencing all of the evidence in the reappointment
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and misconduct complaint matters, he did not address that evidence in
connection with imposing sanctions. As stated, our judgment that
appeal was warranted involves all of the evidence we have on Judge
Kirscher, which the Chief Judge miscegenated into the disqualification
appeal as shown by his “judicial misconduct” remarks, but without
addressing it as the basis for our justification to appeal. Plainly, our
request for an investigation into Judge Kirscher’s conduct to the
Judicial Council, given the totality of the evidence, particularly the
Edra Blixseth documents, was justified. In my professional judgment
and experience, the Montana bankruptcy proceedings were the product
of “enormous capital and political favors to insure they get the right
result from the Montana bankruptcy judge,” just as Ms. Blixseth stated
to her lawyer, and which the overwhelming weight of the evidence
supports. However, the Chief Judge thwarted any investigation into
Judge Kirscher and the production of his emails by holding the
investigation “in abeyance.” His sanctions order bespeaks retaliation
and an effort the failure to address the critical underlying evidence
justifying our appeal.
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7. In my professional judgment after 44 years of litigation, the
foundation of our entire adversarial system of justice is based on an
impartial judge with blinders on when it involves ex parte
communications. When evidence exists supporting gross deviations
from that basic principle, particularly when the reputation and
integrity of judges are involved, dutiful advocacy mandates a challenge
to their impartiality. Here, as the evidence evolved, the two Edra
Blixseth documents confirmed everything we already believed was
supported by extrinsic, documented evidence and admissions. The
bankruptcy process had been corrupted against Tim Blixseth in favor of
Edra Blixseth contrary to the law and evidence.
8. The Chief Judge understandably desires to protect the judges he
oversees. My duty is to exhaust all of Mr. Blixseth’s rights and remedies
given the evidence and the magnitude of the issues involved even when
it involves a challenge to perceived judicial bias . Almost a Billion
Dollars of Blixseth marital community assets were distributed by Judge
Kirscher. Even the Supreme Court of Montana has stated that the
Montana judiciary has a history of corruption. I sent the letter to the
judicial conference because our system works that way, because I
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continued to protect Mr. Blixseth’s rights based upon my assessment
that the Court was applying a double standard on my assessment of the
evidence regarding Judge Cebul’s alleged misconduct, the Chief Judge’s
role in that matter, and my assessment of Judge Kirscher’s bias and
alleged misconduct in this specific case involving far more serious
conduct than that of Judge Cebul. I have no remorse about my
assessment of the evidence, no remorse about my advocacy for Mr.
Blixseth, and no remorse about my letter to the judicial conference
challenging the Chief Judge’s role in holding the investigation of Judge
Kirscher “in abeyance.” I have professionally adhered to all of the rules
throughout these proceedings, I observed personally that Judge
Kirscher did not follow the rules in many instances including his court
room exchanges with Mr. Patten, which he endeavored to conceal, in
fact repeatedly deviated from the rules to fulfill a pre-designed result;
and that Edra Blixseth and my opponents in putting the YC into
bankruptcy not only failed to follow the rules, they collectively
concealed over $50 million in Edra Blixseth’s criminal bank fraud in
order to obtain the Yellowstone Club. SER 2740-2787. Yet Judge
Kirscher exonerated her and now the appellees rely upon her
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credibility; and my client is subject to a $40 million judgment involving
a gross deviation from due process and the Federal Rules of Civil
Procedure. The evidence establishes that recipients of Judge Kirscher’s
rulings – Burkle and Byrne - paid off the Montana Governor to the tune
of $1.5 million at the same time that the bankruptcy scheme was being
implemented. The whole matter smells.
9. The appellees cite a vacated 33 year old sanctions order by an
alcoholic judge in Daytona Fl, who I was subsequently informed by an
Assistant Attorney General for the state of Florida was being “removed”
from the bench, and another 30 year old “Scientology war” order. These
irrelevant attacks bespeak their desperation to have the Ninth Circuit
sweep this matter under the rug by vilifying me. I responded to those
attempts before Judge Haddon with the attached declaration. Exhibit 4
attached hereto.
10. As for the continuing investigation into these matters, the roles of
Edra Blixseth, Judge Kirscher, the Worden Thane law firm, and Ms.
Blixseth’s partner, Mr. Montgomery remains at issue. Although I do
not represent Mr. Montgomery, I have been in contact with law
enforcement authorities relating to his involvement with Ms. Blixseth
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and the CIA; and I have reason to believe that Mr. Montgomery is in
the possession of evidence, and is in the process of securing immunity,
and that the authenticity of evidence in his possession will be subject to
scrupulous forensic examination.
11. The Court should know that Edra Blixseth and her attorney also
filed a plainly perjured bar complaint against me which has been
dismissed. Hence, the motives of Ms. Blixseth to aid the appellees in
this matter. See Exhibit 1 attached hereto.
12. The appellees have made credibility an issue, mandating an
evidentiary hearing, particularly in connection with the Edra Blixseth
documents, and my reliance thereon to justify appeal of the
disqualification motion. My assessment of that evidence and the
requested investigation into Judge Kirscher is at issue. My assessment
of Edra Blixseth’s conduct and credibility in this matter was
substantially and gravely impacted by Judge Kirscher’s conduct to
conceal the entirety of the evidence we put before him and the Montana
Bankruptcy Court (see Exhibit 3 hereto) regarding Edra Blixseth. My
44 year study as a litigator before juries specializing in cross
examination about “lying” and perjury by material witnesses was a
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critical component of my assessment of the evidence supporting
disqualification. Judge Kirscher’s continuous, unwarranted, improper,
erroneous suppression of the evidence of Ms. Blixseth’s conduct, and the
admitted destruction of evidence on her computers, which Judge
Kirscher ignored, created a compelling conclusion to me, buttressed by
all of the additional evidence, that “political pressure” had in fact
influenced him. Much has been written in professional journals, books
and legal articles about “lying”, particularly in the context of “human
evil” in connection with “scapegoating”, which has been defined as the
use of lies to cover over misconduct or other lies by those in a position of
power by means of lies to blame or attack their victims or those who
expose them, thereby perpetuating “evil.” See eg , M. Scott Peck.
“People of the Lie.” Simon and Schuster, 1983. The bankruptcy plan
approved by Judge Kirscher itself fits this model with the
“scapegoating” of Mr. Blixseth, and now the targeting of his lawyers.
The proceedings in the Montana Bankruptcy Court in my professional
assessment involve rampant lying and a resultant “evil” plan involving
a gross miscarriage of justice. Remarkably, as cited below, Mr. Byrne
and his cohorts used this precise term of “evil” to describe their conduct
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and Mr. Byrne’s “plan” to obtain a “billion” dollars. Judge Kirscher’s
“findings” regarding Edra Blixseth, a proven pathological liar who
defrauded banks and lenders of over $50 million, who blatantly
destroyed evidence on her computers, who filed a perjured bar
complaint against the undersigned – dismissed, who entered into an
overtly fraudulent “deal” with Mr. Byrne to put the YC into bankruptcy,
and who now denies the authenticity of documents on her computers
which have been forensically authenticated and the hard drives
preserved for further examination, must awaken this Court to justice
gone awry. See Exhibit 1 attached hereto. See complaint and exhibits
filed with the Judicial Council. In my professional judgment, the most
compelling inference for Judge Kirscher’s “findings” protecting Ms.
Blixseth, relates to ex parte communications between Ms. Blixseth’s
lawyer, Mr Patten and the Judge which are evidenced in the
authenticated “Notes on the MSA.” The inference that I draw from the
highly suspect ex parte communications between Mr. Patten and Judge
Kirscher, which are implicitly referenced in the numerous, detailed
references to Mr. Patten in the Notes on the MSA, is that the excessive
judicial protectionism of Ms. Blixseth was done because of Mr. Patten’s
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concern that she would blow open their entire fraud unless she was
protected. Hence, Ms. Blixseth now reportedly receives $70,000 per
month as the “historian” for the YC.
13. The financial motive for the Burkle/Byrne/Blixseth cabal to put
the Yellowstone Club into bankruptcy, have Mr. Burkle
contemporaneously “donate” approximately $1.5 million to the Montana
Governer to use “political pressure” in the bankruptcy proceedings, to
make a contemporaneous secret deal with Edra Blixseth in connection
with the divorce proceedings to obtain the Yellowstone Club, to pursue
a “brilliant but evil” bankruptcy “plan” to make “a billion dollars” and to
now payoff Ms. Blixseth to the tune of a reported $70,000 per month
can be found in numerous documents exemplified by these few: (a) an
October 27, 2008 email between Mr. Byrne and one of his agents, just
12 days before Edra Blixseth filed the bankruptcy petition, in which
Mr, Byrne claims he is writing a bankruptcy “plan” which “could be
brilliant” (Mr. Byrne is not a lawyer but has spent 25 years using the
bankruptcy system to acquire assets), the agent responds it “could be
worth a billion dollars,” “dangerous,” and “possibly evil”, and Mr, Byrne
affirms “it is brilliant;” (b) a March 25, 2008 email to Mr. Blixseth – just
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the day before Mr. Byrne had to close or risk default on Cross Harbor’s
$455 million contract to purchase the Yellowstone Club - to put the
Club into a “pre-packed bankruptcy” to “leverage the B’s” – the minority
shareholders – and to deal with the “nervous” Credit Suisse
bondholders. Mr. Blixseth rejected this judicially manipulated scheme.
Edra Blixseth did not. Exhibit 6 attached hereto. Mr. Byrne the next
day, March 26, 2008, revoked the contract and then within 60 days
began negotiating with Edra Blixseth to have her obtain the Club out of
the divorce proceedings and put it into bankruptcy. An “evil” and illegal
plan to use the Montana bankruptcy court to pull off their “billion”
dollar scheme.
14. The foregoing exhibits, and those cited in my response to the OSC
and numerous additional documents in the appellate record, constitute
just a few documents buttressed by many, many more that I have
examined, justified then and justify now, my belief and professional
judgment that my client has been the victim of the “appearance of
judicial bias.” Judge Kozinski should in good conscience disqualify
himself for all of the reasons cited in my Reply brief.
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Signed under the pains and penalties of perjury this First day of May,
2014 under the laws of the United States.
/s/ Michael J. Flynn
Michael J. Flynn
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"#$%&%' (
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R Y C j j V C DN THE UNITED STATES COURT OF APPEALS ï
s
tos) JF lékEjOR THE NINTH CIRCUIT
AUS 2 1 2213
NO. 12-35986
ju .. . -
nos-zEzun -
ATE
TIMOTHY L. BLIXSETH
Appellant,
YELLOWSTONE MOUNTAIN CLU
J
LLC
YELLOWSTONE DEVEOPMENT
,
LLC
B1G SKY RIDGE, LLC
YELLOWSTONE CLUB CONSTRUCTION CO
.,
LLC
Appellees.
REPLY IN SUPPORT OF EMERGENCY MOTION UNDER CIRCUIT
RULE 27-3 AND 27-13 TO FILE UNDER SEAL AND IN SUPPORT OF
RELATED MOTION TO STAY
Appeal from the United States District Court for the District of Montana
Case No. 2:1 1-73-BU-SEH
Christopher J. Conant
Conant Law LLC
730 17th Street
Suite 200
Denver, CO 80202
Telephone: (303) 298-1800
Cconantxcon(Intxj6Wrs.com
Michael J. Flynn
P.O. Box 690Rancho Santa Fe, CA 92067
Telephone: (858) 775-7624
Phillip H. Stillman
Stillman & Associates
300 South Pointe Drive,
Suite 4206
Miami Beach, FL 33139
Telephone: (888) 235-4279
Michael J. Ferriro
Law Oftice of Michael Ferrigno,
PLLC
1200 N. Main Street, Suite 486
Meridian, ID 83680
Telephone: (208) 319-3561
michaelferrignoWerrigno-law.coln
Attorneys for Appellant Timothy L
.
Blixseth
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Appellant, Mr. Blixseth, hereby submits this Reply Brief in Support of his
Emergency Motion to Stay that he conditionally filed under seal
ln light of the time sensitive natureof the Emergency Motion to Stay and
necessarily short reply period, Mr. Blixseth cannot fully respond to the numerous
mischaracterizations, half-trtlths and incomplete recordsset forth in the YCLT'S
Opposition. This is simply not the fol'um in which to spin in a favorable light one
party's version of nearly five years of highly contentious litigation in numerous
fonlms between the same parties
Mr. Blixseth will therefore make three primary and succinct points
.
First and foremost, the YCLT opposes the Emergency Motion to Stay by
attacking the credibility and veracity of the evidence submitted by Mr
Blixseth in
support thereof. As the supporting evidence demonstrates
,
Mr. Blixseth's counsel
undertook sufficient independent efforts to verify as best they could the
authenticity of the evidence of judicial misconduct supporting the Emergency
Motion. Mr. Blixseth's counsel obtained sworn testimony from Edra Blixseth
authenticating certainevidence and also hired independent computer experts in
pursuit of their investigative duties
.
Undoubtedly other parties will and do dispute
the meaning, weight and credibility of this evidence
.
But the point of the
Emergency Motion was not to have this Court weigh evidence
,
assess credibility
1
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and adjudicate the facts within appellate motions practice, although that is
apparently what the YCLT seeks with its Opposition
.
Rather, the point of the Emergency Motion is to demonstrate to this Court
that there is
Kirscher has engaged in judicial misconduct and that due process and the interest
a genuine issue of material fact conceming whether or not Judge
and appearance of justice requires that all of the YCLT'S judgment enforcement
efforts be stayed pending resolution of these genuine issues of material fact by an
independent and objective fact-finder.
investigation and fact-findingis required
,
and that is
Undoubtedly further independent
impetus of the Emergency
Motion.
Moreover, just today did Mr. Blixseth learn that his concerns justifying
emergency relief have come to fruition as unbeknownst to Mr
.
Blixseth, the YCLT
is presently executing on the $40 million judgment granted to it by Judge Kirscher.
See U.S. District Court for the District of Nevada
,
Case No. 2:13-cv-01434.
Second, much of the YCLT'S Opposition is dedicated to making gratuitous
personal attacks against Mr. Blixseth and his counsel
Such personal attacks are
not only unfortunate from a personal perspective
,
but irrelevant to the Emergency
Motion. See e.g., In re Loloee
,
24l B.R. 655,663 n. 9 (9th Cir. B.A.P. 1992)
(EtAbuse the opponent when you have no basis for argument.''CdA.s Cicero said, Gin
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hominem decendum est igitur,quum oratio argumentationem non habet
' PRO
FLACCO j 10''). Again, Mr. Blixseth and his counsel through signiticant
independent investigation and vetting have found suffcientevidence to raise a
genuine issue concerning whether JudgeKirscher and the beneficiaries of the
lt is now for this Court to decide
Mr. Blixseth should be stayed until
YCLT have
simply whether the YCLT'S efforts against
engaged in judicial misconduct.
such time as an independentfact-finder vets the evidence or this appeal and its
1 2elated appeals are processed
.
While it is all too easy for the YCLT to oppose any judicial relief Mr.
Blixseth seeks based on the perceived negative character traits of Mr
.Blixseth and
his counsel (a perception that has been wrongfully perpetuated), the 1aw should be
blind to such methods of advocacy and should defer on factual issues to
independent and objective adjudicators.
Third and finally, the YCLT believes there is some meaning to be gleaned
from the fact that Mr. Blixseth has not yet renewed his contempt motion against
1 The appeal in this case is one of many inten-elated appeals pending before this
Court. see Statement of Related Cases included in Mr. Blixseth's Opening Brief in
this case.
2 B d on a recent order from the Chief Judge
,
he his holding his review of these
Complaint of Judicial Misconduct that Mr. Blixseth in abeyance pending resolution
of the appeals pending before this Court. Thus, Mr. Blixseth requests that all of
the YCLT'S judgment enforcement efforts be stayed, at least until resolution of this
appeal as well as the numerous other related appeals.
3
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Edra Blixseth based on her perjury in the Califomia Superior Court supported, in
part, on the same evidence with which he supported his Emergency Motion
.While
the YCLT'S argument is entirely irrelevant
,
no such meaning should be inferred.
ln fact, one of the reasonsthat Mr. Blixseth has not yet renewed his contempt
gathering additionalevidence of Edra Blixseth'sotion is because he has been
perjury as part of her documented scorched litigation tactics against her adversaries
and their attorneys.See Montgomery v
.Etreppid Technologies, LLC, 2009 WL
910739, 31 (D.Nev. 2009).With that evidence now gathered and having recently
defeated the YCLT'Sand Montana Department of Revenue'sseven-month long
effol't to force Mr. Blixseth
much of Mr. Blixseth's attention (see U.S.
into an involuntary banknlptcy which has diverted
Bankruptcy Court for the District of
Nevada, Case No. 1 1-15010),
3 i t Edra using the same evidence that he used to support hisontempt motion aga ns
Mr.Blixseth is now preparing to re-new his
Emergency Motion. Moreover,as to the YCLT'S reliance on the çtafter the fact''
declarations of Edra Blixseth and her attomey filed in California Superior Court in
which they attempt to retract their prior sworn statements in which they both admit
to creating a document wherein they acknowledgetheir complicity in judicial
misconduct, Mr. Blixseth has already responded to those allegations in pre-hearing
3 The California Superior Court denied his contempt motion in January 2012
)
without prejudice to allow Mr. Blixseth re-file it in appropriate fonu and format.
4
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briefing before the California Superior Courtand has innumerable grounds upon
which to impeach anything Edra Blixseth and her attorney say under oath when the
opportunity finally presents itself
A complete copy of this reply brief with its
supporting declarations filed with the Califomia Superior Court is attached hereto
4 B t that of course is the point of the Emergency Motion
.
Dues Exhibit 1. u
process and the appearance of justice requirethat all the YCLT'S efforts against
Mr. Blixseth be stayed pending resolution by an independent adjudicatorts) of the
genuine issues raised in the Emergency Motion
.
That is all Mr. Blixseth seeks
.
He
does not
Court resolve disputed factual issues
.
seek, as apparently the YCLT does
,
to have the Motions Panel of this
Dated, August 20, 2013:
,.
?
Mi el J. Flynn
Chrl her J. Conant
Attorneys for the Appellant
4 I this reply brief and its supporting declarations
,
Mr. Blixseth and his counsel
explain the efforts they undel-took verify the evidence submitted in support thereof
,
which evidence was also used to support the Emergency Motion
.
5
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CERTIFICATE OF SERVICE
1 hereby certify that onthe 20th day of August, l mailed the foregoing
document by First Class Mail, postage prepaid to the following:
Robert Bell
Mullin Hoard & Brown, LLP
Amarillo National Plaza Two
Suite 800
500 South Taylor, Lobby Box #213
Amarillo, Texas 79101-2445
Counsel for the YCLT
Charles W. Hingle
Shane P. Coleman
Holland & Ha14 LLP
401 North 31st Street
Suite 1500
Billings, MT 59101-1277
August 20, 2013 - N.
Christopher J. ant, Esq.
1
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.
,
t
.
r
'
-
-
.
t, , j
2)
X'X$
j.,
f. t
1 CHIUSTOPHER J. CONANT
'Cal. B/No. 244597
730 17m Skeet, Suito 200 F j k ; DD
envc, Colorado 80202 SupEjtolvjgguujjjjq..T
elcphone: (303) 298-1800
4 Facsimile: (303) 298-1804 JAN 0 7 2213
Email: [email protected]
5 Attomey for Timothy L
.Blixseth -.-
R Reid - *
7
8 SWERIOR COURT OF CALIFORNIA FORTHE COUNTY OF mc lts
mE
9 In r4 the M
aniage of: Blixsoth Casô No. RmmD91152
1: yeasslgncd to Dcpt. 10 from Dept. F501)
eutioner: Edra Blixseth
11 x RRRPONDENT'S REPLY BRIRF IN
Mu SUPPORT OF MRMORANDUM OF POINTS
12 Axo AUTHORITDS m suppolt'r OF
Respondent: Timoly L. Blixseth RsspoxoExrs MoTloN
FoR3
SANWIONS AND TO SHOW CAUSE
14
15 Judge: Sharon J. Watem
Heming: January 14, 20136
Time: 8:30 mm.
Dept. 107
18
19
20
21
22
24
25
26
27
28
RVPOYX SU LY BRWP
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1 CHRISTOPHER J
,CONANT
'cal. B JNo. 244597
73: 17m street, Suite 2O0
Denver, Colorado 80202
Telephone: (303) 298-1800
4 Facsimile: $03) 298-1804
Email: [email protected]
5 Attorney for Timothy L
,
Blixsel
6
7
8 SUPERIOR couR-r oy CALIFORNIA FORTHB colrx'rv op' RIVERSIDE
9 In re the Marriage of: Bli
xseth Case No. RIDIND9I 152
j () (lteassigned to Dept,10 from Dept. F501)
etitioner: Edra Blixseth
11 RESPONDENT'S REPLY BRIEF IN
and SUPPORT OF MEMORANDUM OF POINTS
12 xxo AUTHORJTIES IN SUPPORT oy
Respondent: Timothy L. Blixsdh psspoxopxTys MoTloN FoR
13 SANCTIONS AND TO SHOW CAUSE
14
15 Judge: Sharon J. Waters
Hearinj: January 14, 2013
16 ume: 8:30 am
.
Dept, 107
18
19
20
21
22
23
24
25
26
27
28
RBSPONDENT'S REPLY BMEF
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1 Respondent Tilnothy L. Blixseth, through his undersigned, hereby submits this Reply
2 brief in support of his Request fbr Order. As an initial matter, Petitioner repeatedly suggests that
Respondcnt's Request for Order was not appropriate because it was allegedly not filed by
4 Respondent's counsel of record. Petitioner is incorrect. The record reflects tlaat on or about July
14, 2O1 1, Mr. Conant, a member of the California Bar, associated in as counsel in this matter
.
6 1
.
PETITIONER HAS BEEN CAUGHT IN HER TANGLED WEB; HER
EXPLANATIONS ARE NOT ONLY UNAVAILING BUT CONTAIN FURTHER
1 ADMISSIONS 'OF HER PERJURY AND FRAUD ON TITIS COURT
g A. Petitioner and Mr. Holahan Admit to their Periurv and Fraud on this Court
It is now undisputed that Petitioner and Mn Holahan not only concealed assets from
Respondent so tllat he could not enforce the MSA obligations that Petitioner owes him
,
but they0
made materially false representations to this Court in furtherance of their concealment
Altlaough 1
Petitioner and Mr. Holahan attempt to provide innocent explanations for theil' now admitted2
gaudulent conduct, their eqplanations embroil them further and are admissions of their fraud on3
this Court when they represented that she had no assets with which to satisfy the obligatious she4
owes to Respondent, Specifically, Petitioner admits that she did not open bank aocounts in her5
own name because she wmzted to conceal her assets from Respondent to whonn she owes $20+6
million in non-dischargeable MSA obligations. Petitioner's Declaration at p. 4:25-5:2. This is by7
definition fraudulent aotivity. Cal, Civ. Code â 3439.04(a)(1). Petitioner even admits that her8
concealment effol'ts in this regard paid offwhen she successfully thwarttd Respondent's attempts9
to enforce the MSA in October of 201 1. fJ. Of com%e, one of the reasons Petitioner was0
successfkl in thwrting Respondent's efforts to collect money legitimately owed to bim was 1
because Petitioner and Mr. Holalaan represented to this Court in July and October of 201 1 that she2
had no assets, Petitioner and Mr. Holahall now admit that she did have money and assets, she just3
did not have it in her own name but was admittedly concealing and latmdering her assets with the4
facilitation of Mr. Holahan and others for the vel'y pupose of defiaudinn Respondent before th
k5
Court in his ability to enforce the MSA obligations Petitioner owes to him. 1d. ln s1Aol4,6
Petitioner admits to successfully defrauding and concealing assets from Respondent by means of7
intontional misrepresentations to this Court. This is a shocking admission and most assuredly8
IGSPONDENT'S REPLY BR1El7
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1 ts sanctions against her and Mr. Holaham: See also Cal
Rule of Prof. Conduct 5-220) 5-arran
2 2001).
3 Aside from their shocking admissions about intentionally conoealing assets and making
4 knowingly false representations to this Coul-t, other aspects of Petitioner's and Mr, Holahan's
5 declarations reveal significant deception. For example, Petitioner in her deolaration denies that
6 she owned FF&E Liquidators, lnc. Petitioner Declaration ( 6. Yet, Mr. Holahan testiûes that
7 Petitioner directed him to incorporate FF&E Liquidators, Inc,. dtfor he1'.'' Holahan Decl. 6.
*8 While their inability to tdget their story'' straight about FF&E Liquidators, lnc., is indicative of
9 their lack of oandor with this CouTt, that lack of candor morphs into outright deception in lig'ht of
10 Petitioner's other admissions in hcr declaration. Speciscally, in his declaratlon Mr. Montgomery
1 1 explains how many of the payments to him from Petitioners were funneled through FF&E
12 Liquidators, Inc., which is the company Mr. Montgomery testifi es was a company owned and
13 contTolled by Pdtitioner. Montg. Decl. j 6. The bank statements sublnitted by Mr. Montgomery
14 oorroborate this. Mont. Decl. 12, Ex, 2. And Petitioner does not deny that she paid Mr.
15 Montgomm'y through FF&E Liquidators, Inc. Jndeed, Petitioner admits that she paid Mr.
16 Montgomery over the last yeal' to develop software (Petitioner Declaration 6) but is noticeably
17 evasive about how she paid him particularly in light of the faot that she admits that she did not
18 have any bank aocounts in her own name. What is revealed by Petitioner acknowledging th't she
19 -. -
1 In her declaration
,
Potitioner exouses the fact that she did not open bank accounts in her own
20 name by shifting the blame to Respondent an
d his desire to colleot on money legitimately owed to
him: in other words, she cries: d'Tim made me do itl'' Petitioner's Deolaration at p. 4:25-5:2.
21 Even assuming that Respondent is the only reason Petitioner engaged in a money laundering
scheme to hide her assets, this does not excuse her fzaudulent transfer activity. Petitioner
22 legitimately owes Respondeht over $20 million in outmacding MSA obligatiohs. Petitioner may
not like the fact that she owes this money to Respondent, but she does and she owes it to him after
23 bargaining at arms-length while they were b0th represented by competent counsel. Petitionor,
unfortunately, ended up in banltruptcy slzortly aher the MSA was consmmmated beoause, coupled24 with inancial and c'redit crisis that hit the world economies in the fall of 2008, she made a
number of risky business decisions and assumptions in entering into the MSA, al1 of whioh her
25 attorneys cautioned her about (see Exhibit 2 to Conant Dec1.) before entering into the MSA,
Seelting to avoid the oonsequences of her own pool' decisions, she has decided to blame
26 Respondent for a1l of her post-MsA woes, While this has been Petitloner's theme for the last
several years, Petitioner's latest declaration is remarkable in that it appears to be the srst time that
27 Petitioner has openly admitted to engaging in f'raudulent activity, yet she is tmashamed of doing
so because she apparently believes that blaming Respondent for her own conduct is a suffcient
28 excuse to exoulpate her from wrong doing'
lulsl'oxoENT's RSPLY BluISF
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1 paid M.1*. Montgolnery tlarough FF&E Liquidators, Inc. while at the same time denying that she
2 owned FF&E Liquidators, Inc. even though Mr. Holahan admits that he incorporated Stfo1' her'' is
3 a significant and unmitigated level of deception on this Court.z
4 B. Petitioner's Explanation of Her Pen-ured Statements Concernhzz Mr
.
Flvnn
Are Unavallinc
5 P
etitioner admits to the authenticity of the emails provided by M1'. Blixseth in his Request
6 f
or orderwherein she admîts to her attornôys and others that Mr. Flynn was never her lawyer
,
1
-
ftlrther admits that during the relevant time period in which she made these numerousetitionel
8
representations to her attornoys uaat those emails acourately reneoted lwr belief that Mr
.
Flynn
9
.
her attorney. Petitioner's Deolaration lf s (çqt is true that I later stated that Mike Flynnas nevm
10
was never my lawyer. That was my understanding then . . . .''). However, in atl attempt to explain
1 1
away her demonstrable perjm'y before this Court in which she testiles under oath that Mr, Flynn
12
was her attorney, Petitioner hides behind the expedient excuse that with hindsight she now
13
understands and believes that under California 1aw Mr. Flynn was her attorney because she paid
14
.
Dennis Montgolnery and he allegedly provided her some casual insightis fees to replesent
15 ,
oonceming ller divorce because it impactt &is thon o lent M'r. Montgomery, ''-lrl.lll'tlonex s posb
16 h
oc excuse simply higllliglïts that siïe knows s:e has beon oaught peTjudng hevself.
17 , t
wlsted peljuries are specmcally encapsulated in her present sworn use ofs. Blixseth s
18
.
d çqater'' in the aforesaid quote. When she now states under oath tllat ït 4çis true that 1 laterhe wo1
19
20 2 Jn support of her defonse that she and Mr
.
Holahan did not mislead t'hts Court when they
represented that she 'had no assets, Petitioner believes s.t is skgnifloant that the pictmes skowing
21 hel. lavish fulmishings and art in her luxury Bevel'ly Hills apartment (an apal-tment costing
$7,500/month in rent, Exhibit 1 to Conant Decl., pp. 8:5-8, 22-24) were taken four months aftel'
22 she made these representations. This is siinply incredible. Do Petitionm' and her attorney rcally
oxpect this Cotu't to believe that she was destitute in July and October of 2011 but then only two
23 months later 'thit it big'' allowing her to live in a luxury Beverly Hills apartlnent decorated with
the a'rt and furnittve from Porouphle Creek whioh she owned before the divorce? This is non-
24 ense
.
11 , belief that California 1aw dictates that Mr
Flynn was her lawyer because she paidetitioner s
25 Mr
F. lynn's legal fees to represent Mr. Montgomery is unsupported by law. First, whetlaer
california 1aw applies is highly questionable because Mr. Flynn represented Mr. Montgomery in
26 connection with litigation in Nevada federal comt Regardless, both California and Novada l'ules
of professional conduct s'peciâcally contemplate and allow someone other than the client to pay
27 the client's attorneys' fees without the payor also becomhlg a client of the attorney by vil-tue of
aying tho client's fees. California Rule of* Professional Conduct 3-31O(F); Nevada Rule of
28 professional Conduct 1.8(9.
RESPONDENT'S REPLY BRIEF
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1 stated that Mike Flynn was never my lawyer,'' she is again lying to the Court. She did not çllater''
2 state that Mr. Flynn was her lawyer, she repeatedly made that assertion contemporaneously with
3 when the issue was pending. She previously in July, 2007, when the res gestae of this issue was
4 then being litigated in the Nevada Federal Coult made those denials, not d
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1 irrelevant.'' 1d. The Petitioner's contemporaneous emails to her then attorneys and others
2 repeatedly disolaiming in no uncertain terms that Mr. FlymA was C'never her attorney''
3 uneqtlivocally demonstrate that she did not believc that Mp Flynn was her attorney. Thus,
4 because Petitioner never believed that Mr. Flynn was her attorney, and details in emails her
5 conduct consistent with that contemporaneous belief (i.e., that she had her own attorneys and
6 always corrected Mr. Flynn if he suggested that he was her attorney), as a matter of law, Mr.
7 Flynn was never her attorney. The Petitioner's now Sfhindsight'' belief to the contrary after being
8 coached by Mr. Holahan and taken for no other purpose than to gain a strategic litigation
9 advantage over Mr. Blixseth merely higblights her atld Mr. Holahan's unmitigated willingness to
10 commit peljury when it suits their ends.
1 j c. Petitioners' Claims that Exhibits 9. 10. 11 and 12 Are Alte
red and Fabricated
Rinu Hollow
12
.
d lwr attorney have no other choice but to claim that the documents attachedetitionel an
13
.
d because f r them to admit to their authenticitys Bxhibits 9, 10, 1 1 or 12 are fabrioated or altele
14
. tlw criminal implications of theirs for theln to admit serious crimes. Moreover, to deflect flom
15
oNvn documents, Petitioner and her attorney pisdirect this Court by going on the offense against
16 R
espondent, his attorneys and M1-. Montgomery. Their efrorts ring honow.
17 . ' petiti
oner cannot deny the authenticity of the tsNotes on the MSA'' dooument11st,
1 8 ' ,
attached as Bxhibit 11 to Montgomm'y s Dcclaration because on December 14, 2012, she
19
.
document under oath during her deposition. lndeed, not only diduthenticated this vely
.
20
.
tlwnticate this document at her own deposition, but the transcript reflects that Mr.etitionet au
21 i
also authenticating it as a document he worked on with Petitioner.olahan spont signiscant t me
22 lixseth's Decembel' 14
,
2012 deposition transcript, pp. 268-276 and deposition exhibitee Edra B
23 laration as Exhibit 1 lled concurrently herewith
.113 their Respons:1, attached to conant Dec
24 h this court
,
Petitioner and Mr. Holahan fail to acknowledge that they authenticated thisiled wit
25 ks ago
.
Instead, Petiuonel. and her attorney submit self-serving emailsery documentjust wee
26 ç$ d aste'' of some form of the SçNotes on the MSA'' document thathat allegedly contain a copy an p
27 . d in septembm' of 2009 (Holahan Ex
A-1) and tlaey also submit the alleged realetitioner pepare
28
RESPONDENT'S REPLY BRIEF
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tlNotes on the MSA'' document (Holahan Ex. A-3). Neither of these documents helps their cause,
2 Ctlriotlsly, on the last page of what Petitioner claims to be the real tiNotes on the MSA'' document
3 (Holahan Ex. A-1 and A-3), there is an unusually large gap or lnultiple ç'hard return'' spacing
4 where Petitioner's most illicit statements were located in the ''Notes on the MSA'' document
5 attached to Montgomery's declaration. Clearly Petitioner and her attorney deleted hor illicit
6 statements from the doculnents they filed with this Court but failed to properly edit those
7 doctmzents following their o'wn alteration thereof to Rcover their tracks'' by removing the gap
8 created by their deletion.
9 More importmttly, however, independent evidence supports the authenticity of the
10 doculnents submitted by Mr. Montgomery tlaat cannot be disputed by Petitioner's and MI..
Holahr's self-serving declaration. Submitted concm-rently herewith is the declaration of Robel't
12 Whiteford who is an indopendent computer expert that Mr. Blixseyh and Mr. Flynn retained
13 months ago for the ptlrpose of investigating the ''mdadata'' contained on electronic fles and
14 computers that Mr. Montgomery produced to Mr. Blixseth's counsel. See also Conant Decl. 7.
15 Among the many things investigated by Mr. Whiteford were the dates that Exhibits 9, 10 and i 1
16 were created and last modified on Vs, Blixseth's eleotronically stored media. 1d. As Mr.
17 Whiteford testiûes in his declaration, the Gtblotes on the MSA'' document was created on
18 September 20, 2009 and last modified on October 23, 2009. Whiteford Declaration 7. The fact
19 that the Notes on the MSA document as submitted by Mr. Montgomery in his declaration was last
20 modified on Octobor 23, 2009 renders meaningless the supposed September 29, 2009 earlier
21 version orthe document that Mr. Holahan attaches to his declaration. Indeed, notably absent
22 from Petitioner's and Mr. Holahan's declaration is any representation that Exhibits A-l and A-3
23 to Mr. Holahan's declaration are the latest versions of that document in their possession.
'eover, the last modiication on October 23, 2009 occurred at a time when Petitioner had4 Mo1
ion and control of the computer on which this document was modified. ln qddition,5 possess
itioner suggests that Mr. Montgomery would have had a motivation to alter the document6 Pet
f only since June of 2012 when she parted ways with him, yet the last modiication to this7 hi
msel
d ears before then at a time when Ms. Blixsoth had possession of the fles and8 d
ocument oocurre y
.
6
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1 well befol'e any alleged motivation by Mr. Montgomery to tamper with the doouments would
2 have arisen.
3 Second, to deflect from the criminal implications of their own documents, Petitioner and
4 Mr. Holahan go on the offense against Respondent and his counsel, claiming that Respondent and
5 Mr. Conant submitted knowingly fabricated documents in Mr. Montgomery's declaration.
6 Nothing could be further from t'he truth. ln fm-therance of their investigative duties to this Court,
7 prior to filing Mr. Montgomery's declaration and its accompanying exhibits, Respondent and his
8 counsel l'etained Mr. Whiteford to independently vmify the authenticity of the electronic
9 documents on Petitioner's electronic storage devices, and particularly Exhibits 9-1 1 to Mr.
10 Montgomery's declaration. Conant Declaration 79 Flynn Decl. 13, As discussed above,
1 1 Respondent and his counsel taslced Mr. Whiteford with determining the date created and last date
12 modified of Exhibits 9-1 1 to detennine if these documents were last modi'fied at a time when
13 Petitioner was in possession of the files or if they were recently modifed, thereby suggesting that
14 Mr. Montgomery had altered the contznts of tize files. 1d. Mn Whiteford reported to Respondent
15 atzd his counsel that the original electronic files represented by Exhibits 9-1 1 were last modified
16 on October 25, 2009 , July 17, 2011 (notably this is the date before Petitioner filed her opposition
17 wit, this Cotu't to Respondent's pro lzac vice application for Mr. Flynn), and October 23, 2009,
18 respectively, Whiteford Deol, 7-10. These dates are a11 dates that Petitioner had control of the
19 electronic files (aocording to Mr. Montgomery's declaration which Petitioner did not refute) and
20 therefore Respondent atld his counsel were and are satisfied as to the authenticity of the
21 documents in a mannm. that is independent of any reliance on Mr. Montgomery, Mereover, given
h hi hl ersonal and detailed content of the documents, Respondent and his cotmsel wel'e2 t e g y p
23 suflkiently satisfied that the documents could only have been drafted by Petitioner.
24 Third, the irony of Petitioner attacking the credibility of Mr. Montgomery and referring to
25 him as a dscon-man'' only now should not be lost on the Court and cannot bc believed. Petitioner
26 acknowledges tbat Mr. Montgomery has been her business partner for the last six years.
27 Petitioner so twsted Mr. Montgomery that she paid him $ 100,000 a month between April of'2006
28 and May of 2009 to develop software for her. See 2009 deposition of Petitioner attached to
7
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1 ConmAt Decl. as Ex. 3. Indeed, in an email dated November 5. 2008 (after the MSA was
2 consummated) Ms. Blixseth told Mr. Montgolnery that being successful with their teohnology
3 company was a11 she cared about, notwithstanding the hundreds of millions of other assds she
4 obtained out of the MSA. See Ex. 1 to Petitioner's deposition transcript attached to Conant Decl.
5 as Exhibit 1. Moreover, her own attorneys were smwtioned by a federal court in furtherance and
6 in defense of her padnership relationship with Mr. Montgomery, See Montgomery v. Etreppid
7 Technologies, LLC, 2009 WL 910739, 31 (D.Nev. 2009). Pditioner is also cmrently in contempt
8 of @ Colorado federal court and there is currently a warrant out for her arrest as a result. Conatlt
9 Decl. J 4. Additionally, in her deolaration Petitioner admits to lalmdering mone/ and cash over
10 the last year to pay Mr. Montgomery to develop teclmology for her.
11 The point being, Petitioner has long placed her trust atld confdence in Mr. Montgomery,
5 d has engaged in highly questionable conduct on2 paying h1m $ 100
,
000 a month for three years, an
13 his behalf; therefore her cuzrent attempts to attack his credibility is p'edictable, but not well-
14 taken. Indeed, beoause of the long-standing partnership relationship between Petitioner and Mr,
15 Montgomery, he knows precisely Gçwhere the bodies are buried'' and is therefore best suited to
.
1 66 reveal a11 the frauds that Petitioner has been engaging in over the last sevela years
.
17 z
.
PETITIONER'S SUGGESTION T
-
HAT MR. FLYNN HAS G
IVEN MR.
MONTGOMERY A aGIFT'' IS NOT SUPPORTED BY THE RECORD
18
Petitioner, based purely on conjecture, claims that Mr. Montgomery's declaration is the
roduct of Respondent's attorney, Mike Flynn, purchasing Mr. Montgomery's fonner home in the
20
town of Yal-row Point, State of Washington (hereinaf-ter uYarrow Point Propertyh') out of Mr.
4 Altlzough she claims that she is not laundering money, she admits to not opening bank accounts
22 in her name and using others to funnel money to Mr, Montgolnery a11 under the guise of
. assets from Respondent because she owes him over f20 million in olkigatiooncealing he1
23 undor the MSA. This is the definition of money laundering and is by deinition fraudulent
onduct. See cal. civ. Code j 3439.04.
l ims in her deolaration that she ngvel' shared an office with Mr. Montgomery bpt4 Petitioner c q
,
that slw occaslonally set up a laptop computer m his conference room. Petitioner s assertion ls
25 betmyed by the pictures of her of lce set up included in Mr. Montgomery's supplemental
declaration.
26 6 Respondent categorically denies the allegations in Paragraph 7 of Petitioner's Declaration and
11 o -lAel' similar allegatiops wherein she claims that Dennis Montgomqry told her that Responden
had requested tllat Denms Montgomery
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.
1 Montgomery's bankruptcy estate and giving it back to Mr. Montgomery. The Petitioner fails to
2 understalld the nature of Mr. Flylm's purchase. As the motion filed by M1', Montgomery's
b lkruptcy trustee to sell al1 of Mr
.
Montgomery's assets to Mr. Flynn makes clear, M.r. F ymz3 al
4 purohased the Yarrow Point Property subject to a11 liens and encumbrances. Exhibit E, p. 6, to
5 Holahan Decl. The Yarrow Point Property is subject to a $2.4 million loan which Bank of
6 Amorica is currently foreclosing upon
.
Flynn Decl. 69 Ex. E, p. 4 to Holahan Declaration. lt is
.
7
also subject to a $26 million judgment lien in favor of e'rreppid. Flynn Decl. 6. rnAus, Mr.
8 Flynn could not 'sgift'' the Yarrow Point property to Mr. Montgomery because that propelïy will
9 sooll be foreclosed upon by Banlc of Amerioa as there is no way Mr. Flynn can or will satisfy the
10 defaulted indebtedness encumbering that moperty. What Petitioner ignores on this atready
1 1 collateral matter is tlzat M,. lqynn puwuased a lwmber o.f liugatioa czaims eom 'M,.
12 Montgomery'à estate that Mr. Flynn, as a lftigatol' and wlth extensive knowledge of Mr.
13 Montgolnery's business dealings
,perceives to have potential value. Flynn Decl. ( ( 3, 7. This
14 f
act is made clear in a review of the Sale Motbon as a whole. Ex, E to Hblahan Decl. As to her
.
15 claim that Mr. Mtmtgomery has moved baclc into the Yarrow Poin property, Mr, Monlgolnery
16 (lid that of his own volition and witllout the consent of Mr. Flynn. Flynn Decl. 9. Indeed, the
17 bankruptcyjudge administering Mr, Montgomery's estate approved his trustee's sale Motion
18 only on January 2, 2013, and tlw order approving tlzat motion has not yet been entered, nor does
19 Mr
.
Flynn even have a deed to the vanmw laoint propœ-ty. lqynn oecl, ( 8. Thus, despite
20 petitioner,s insinuations that Mr
.
Flynn somelaow improperly induced Mr. Montgomory to sigu
21 his declaration by çtgiving's Mr. Montgomery the Yal-row Point property and allowh4g Mr.
22 Montgomm'y to move baclc in, Mr, Flynn has not done any such thing and the records reflects that
23 Mr. Flynn and no authority to do any such thing. ln fact, Mn Flynn intends to pursue the
24 sa