David Bergstein Claims Conspiracy Behind Bankruptcy Case
Film executive David Bergstein filed a motion with the federal bankruptcy court Wednesday asking that certain information uncovered by the trustee in the involuntary bankruptcy against Capitol, Thinkfilm, R2D2 and other companies he controlled be kept confidential, and not be given to his creditors or made public.
The filing made by his attorneys Vincent Marella and Jennifer Chang was expected. Federal Judge Barry Russell had requested it last week at a hearing. However, what is surprising are allegations in the filing by Bergstein that the trustee and the lead creditor in the case, the Aramid Entertainment Fund, are conspiring against him.
Bergstein charges that the court appointed trustee, Ronald Durkin, has conspired with Aramid and its representative David Molner to pressure him and his business partner Ronald Tutor to settle the case.
Bergstein also says the trustee and Aramid are working together to “strategize about how to file a plan of reorganization that would create a $50 million tax liability for Ron Tutor.”
In a brief written response Wednesday, Leonard Gumport, attorney for the trustee, said: "It is in my opinion, that once again, Mr. Bergstein is seriously mistaken."
Tutor has claimed he sold his interests in the movie companies involved in the bankruptcy but the trustee, in a recent report, refuted that and laid out his case that the sale document was backdated to make it appear Tutor was not involved when he actually was a company insider who should be responsible for what happened.
Tutor also has claimed he is owed $45 million by the bankrupt companies, which would likely put him first in line to take any assets that remain after the legal case is settled.
Bergstein includes in the filing a portion of what he says are minutes from a meeting of Aramid shareholders, which he says he got through sources outside the bankruptcy case. The document quotes Molner saying “to give you an idea of how much this trustee is on our side, we actually had an hour-long conference call the other day about how we could file a plan of reorganization that would create a $50 million tax liability for Ron Tutor.”
The Aramid document also allegedly says that “the big prize is the film library,” although Molner is quoted as telling his investors that there are not 1,300 films that generate $500 million annually, as Bergstein has claimed, but rather “is more in the order of 600 titles.”
In a brief statement Wednesday, Molner responded: “The suggestion Durkin was anything but impartial is absurd.”
In his Wednesday filing, Bergstein also attaches two loan documents showing he is owed what he says is about $8 million by the bankrupt companies for “value” which he provided through Graybox LLC, a company he formed in 2000 that is not involved in the bankruptcy case.
Bergstein says that the trustee and others have confused Graybox LLC with Graybox Holdings, a company that is owned by the bankrupt companies. Bergstein says that Graybox Holdings was created without his knowledge or consent by his former attorney Susan Tregub, and that is has nothing to do with Graybox LLC.
He says Graybox LLC records and American Express bills which he wants kept sealed include his personal affairs such as money paid for his children’s education, money given to religious organizations, payments to doctors and his personal gambling losses to Las Vegas casinos.
However, Bergstein admits in the filing he used his Graybox LLC account as well as his American Express card for business purposes at times, including to fund post-production of movies and to pay for travel bills for actors, producers and directors.
Bergstein also denies that he ordered any files deleted from his company computers around the time that the involuntary bankruptcy case was filed in 2010. He says some files were moved to consolidate and streamline his systems for the purpose of better delivering and making payments related to movies in his company film library.
Bergsten says he hired computer technology specialist Donald Carroll who will back up his claims that no files were deleted that were not moved elsewhere and saved. Bergstein’s attorneys had filed a declaration to that effect on April 17, which drew a response from the trustee.
In a April 20 filing to the court in response to Carroll’s declaration, there is a declaration from Phuong Kanzaz Nguyen, an accountant working for the trustee, who says she assisted in imaging the computers and met Carroll, who “identified himself as an IT person who worked for Pangea (another Bergstein company).”
Nguyen says that Bergstein did not allow the trustee to image office computers used by Bergstein and his assistant. She also was stopped from imaging another computer, but that the files from that computer were later given to the trustee. She said when she finally got to look at what was sent, thousands of files had been deleted and the operating system “provides no information about how they were removed,” but did confirm the deleted files were not on the server at the time it was copied.
Bergstein says in his Wednesday filing he has cooperated with the trustee to allow the imaging of his company records but that the trustee has used that power to access his private information as well. “I believe the trustee and/or his counsel have not adhered to the terms of our agreement,” Bergstein declares, “and improperly reviewed or attempted to review non-Debtor files.”
A debtor, in this instance, is any of the bankrupt companies. Bergstein says that although the court said he was responsible for the bankrupt companies, he should still not be considered a “debtor” in the case in a legal sense.
Bergstein also denies a claim by the trustee that he has not filed his personal income taxes in recent years. “That statement is false,” he declares.
Bergstein says the trustee offered to amend that part of his report if Bergstein provided him copies of the taxes he filed. His declaration does not say if he did so. The trustee has said in his reports he has not been provided with copies of Bergstein’s taxes.
Bergstein also doesn’t address in his filing the demand by the trustee to copy files on Bergstein’s personal computer and that of his assistant, which were where his companies kept the only records of how money and assets were moved around among his more than 70 corporate entities and among some 212 bank accounts at the Bank of America, as well as other accounts, that the trustee has been able to track down, according to his reports.
Bergstein complains in his declaration that the trustees “hurried dissemination” of his report during a brief period earlier this month when the files were unsealed has caused him trouble and expense: “I have been forced to fight expensive battles in this court, in other courts, and in the press to vindicate my reputation.”
Judge Russell is expected to set a date for a hearing to rule on Bergstein’s motion.