David Bergstein Grilled for Three Hours in U.S. Trustee's Office
Last month, Bergstein's attorneys served a subpoena on Durkin and Gumport to force them to be deposed in the Tregub case. The trustee responded by using his power to pull the Tregub case out of state court and make it part of the bankruptcy case.
"If the insiders (Bergstein and Tutor) are permitted to embroil the Trustee and his bankruptcy counsel in abusive state court litigation involving claims of privilege that rightfully should be controlled by the Trustee," Durkin says in a federal court filing made last Friday, "(it is) largely (to) seek to conceal crime-fraud communications with Tregub that are not entitled to claims of privilege in any event."
"The subpoenas," Durkin adds, "were served in an effort to disrupt and delay an ongoing statutorily mandated investigation of fraud committed by the insiders (Bergstein and Tutor) before and during the bankruptcy cases in which the insiders utilized various counsel (knowingly and/or unknowingly), including Tregub, to conceal assets and information from the Trustee, creditors and the U.S. bankruptcy court."
The reference to their counsel is a warning that Durkin plans to hold to account those lawyers and accountants who helped Bergstein and Tutor commit what he believes was a fraud. He has said the law doesn't discriminate between the professionals who acted in good faith and those who were part of the conspiracy in terms of possible sanctions.
There is a hearing on Aug. 9 before Judge Russell to hear the Trustee's request to be relieved of the attorney-client privilege requirement he inherited when he took over the five bankrupt companies. There is a lot of speculation that if the judge grants his request, as expected, a lot of very explosive documents could be made public.
The trustee set Sept. 14 to continue the creditors hearing, which normally would be a single session. The trustee said it will continue until Bergstein provides the information about assets and debts that is required.
It also came out during the hearing Bergstein is claiming he is a creditor of the bankrupt companies as well and is owed about $1.5 million. Tutor, through a company he owns, is claiming he is owed $45 million. If it is proven they acted improperly, they would not be able to collect anything when the remaining assets are liquidated.
Bergstein was defiant during the hearing. He refused to answer any questions having to do with a related Capitol Films insolvency case in the U.K. where Bergstein is also being charged with falsifying documents. The U.S. Trustee and his British counterpart have been trading information on the cases and trying to be helpful to each other.
Bergstein said would he not discuss anything having to do with the British case and threatened to walk out of the creditors hearing if such questions continued. Gumport ignored him and asked the questions anyway to get them into the record.
One accusation Gumport brought up from the U.K case was that Bergstein had diverted money paid by Warner Bros. which should have been accounted to certain movies (from which royalties and residuals would be paid) to his own personal account. Among the money Gumport says was diverted was $200,000 related to the movie Transformers: Dark of the Moon.
After Gumport finished, creditors were given the opportunity to question Bergstein. Those who did were Mark Sharf of Marritt, Hagen & Sharf, representing a fund associated with the American Federation of Musicians; Joseph Kohanski of Bush, Gottlieb, Singer, Lopez, Kohanski, Adelstein & Dickinson on behalf of SAG, DGA, WGA West and others, and finally David Molner, who represents the Aramid Entertainment Fund, and who was instrumental in forming the creditors.
Bergstein threatened not to fill out the schedules as Durkin demanded, or show up for the Sept. 14 creditors hearing, which he said would again waste his time with the same questions over and over that he has already answered. He said he would only attend if ordered to do so by Judge Russell. Gumport said that he would put a request into motion to force him to provide the figures and appear.