David Bergstein Grilled for Three Hours in U.S. Trustee's Office
The beleaguered film financier avoided answering most questions but did become defiant over one query.
Looking uncomfortable during three intense hours of grilling Thursday at a second creditors hearing in the U.S. Trustee's office in downtown Los Angeles, beleaguered financier David Bergstein said he didn't know, didn't remember or didn't have the resources to answer questions about the affairs and assets of the five movie companies he ran, including Capitol and Thinkfilm, which were forced into involuntary bankruptcy earlier this year.
However, when asked by Leonard Gumport, the attorney for court-appointed bankruptcy trustee Ronald Durkin, if it was not a fact that he backdated a contract by more than a year to make it appear his business partner Ronald Tutor had sold his interests in the movie business to him for $10 prior to the bankruptcy action, Bergstein defiantly and repeatedly said, "No," it was not true.
Gumport hammered away charging the document showing the sale of a holding company called R2D2 was actually created around May 2010. Bergstein said he couldn't remember exactly when he signed that agreement, but that it was some time in the first or second quarter of 2009. The involuntary bankruptcy case began in March 2010.
In recent filings, the trustee has raised the specter of criminal as well as civil sanctions against Bergstein and Tutor for fraud, providing false information and more. One big issue is whether they lied about that sale to keep Tutor from having to testify.
Just how much money Tutor lost investing in the movie business with Bergstein came into clearer focus earlier this week when July 2009 email exchanges between executives at Comerica Bank, one of Bergstein and Tutor's lenders, became public.
The documents indicate Tutor invested $42 million in the movie business (directly and through R2D2) and spent another $45 million as part of an aborted settlement with defunct hedge fund D.B. Zwirn.
Tutor, who is CEO of the international construction company Tutor Perini, settled a lawsuit with the group now representing Zwirn about two months ago for an estimated $70 million, making his total exposure nearly $150 million.
According to the Comerica memo, Bergstein invested $40 million in the movie business through R2D2. Other investors listed are Stephens Inc., a Little Rock, Ark., investment bank that put in $7 million, and investor Jerry Schwartz, who put in $6 million. Other unidentified minority investors also put in $3.2 million.
Just before the Thursday hearing, Bergstein filed a revised schedule of how much money is left in the bankrupt entities. He had filed an earlier schedule that listed zero in every category. The trustee demanded he re-do the schedule, so this time Bergstein wrote in the space for dollar amounts that it was "unspecified."
That brought a sharp rebuke from the trustee, who said that it was impossible to complete the required creditor's hearing until Bergstein filled in his best estimate of what is left and what is owed. "I don't know," insisted Bergstein, agreeing what he provided was not accurate. "I don't have the staff any more (to pull together the numbers)."
Bergstein blamed much of his troubles on his former attorney Susan Tregub, whom he said withheld documents and violated his trust after he gave her his power of attorney.
"She lied for a year and a half," charged Bergstein, adding that he was awaiting a court order to go to her house and look for the missing documents.
After she left Bergstein's employ, Tregub worked with the creditors group that brought the involuntary bankruptcy action. Bergstein claims she abused attorney-client privilege.
Bergstein sued Tregub in L.A. Superior Court in the name of his companies. Since federal bankruptcy court Judge Barry Russell officially put five of them into bankruptcy, those entities have been run by Durkin as trustee.
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