May 25, 2011 6:29pm PT by Alex Ben Block
Judge Denies David Bergstein's Request to Keep Records Confidential
A bankruptcy court judge has denied a motion by David Bergstein to keep private 21 volumes of information and records gathered by the U.S. trustee as part of the involuntary bankruptcy forced on his companies this year.
Judge Barry Russell said Wednesday in Los Angeles federal court that it is time to end the confidentiality of the records in the case, including those for Bergstein's new company, Graybox, which was not among the entities forced into bankruptcy.
The judge also opened the way to make public all of Bergstein's dealings with various Las Vegas casinos and other money spent using his American Express card, including the funding of some movie- and production-related activities.
Bergstein, who was joined in his request to keep the information under seal by his wife and Graybox, was given 30 days to provide copies of their American Express bills with personal expenses for medical, educational and charitable contributions blacked out.
Everything else, including his mortgage payments, are to remain open to public scrutiny and will be available for use in other cases.
Also, before the hearing, Russell gave Bergstein a deadline of 24 hours (until Thursday) to provide a complete list of all of the assets and liabilities of the five bankrupt companies -- including Capitol, ThinkFilm and R2D2 -- along with a list of all current income and expenditures; a statement of the entities' financial affairs; and a list of the 20 largest creditors.
Bergstein had given the court a list of creditors that Ronald Durkin said in his trustee's report to the court earlier this year was inaccurate and contained alleged creditors who told him they were not creditors (there was an issue over the number of creditors, which could have impacted the case).
This week, an attorney said on Bergstein's behalf that there was no need for such information because the trustee already had everything required to compile his own list. Durkin strongly disagreed, and Wednesday the judge sided with the trustee.
That list is considered crucial for a meeting next week in which Bergstein is being compelled by the trustee to appear before a group of creditors.
In a court filing by the trustee Tuesday, Durkin again disagreed with Bergstein's claim that neither he nor his associates destroyed or deleted thousands of computer files shortly after the involuntary bankruptcy case began in March 2010. Bergstein had hired a computer consultant named Donald Carroll, who said no files had been destroyed but some had been deleted and moved.
Durkin disagreed and in the process discovered there was another company computer to which Carroll said files had been moved, one that he had never been told about -- a violation of a court order.
On April 27, when Bergstein filed a motion to keep many of the court records under seal, he included a declaration from another computer consultant, Todd Stefan. Durkin said Stefan's opinion should be inadmissible because it did not meet the legal definition of reliable information. He said Stefan failed to consider the thousands of files that were deleted, did not disclose the existence of the other computer server, and never explained why the previous list of computers provided under court order was incomplete.
Durkin also has repeatedly asked Bergstein to turn over his personal computer and that of his assistant, which are said to hold the only complete records of his business activities, the movement of money among numerous bank accounts and other business records. Bergstein has refused.
Last week, at the request of the trustee, the judge also ordered Ray Reyes, who was Bergstein's in-house lawyer, to be deposed by the trustee under oath. Reyes, who also worked briefly for Miramax, had argued that he should not have to testify. He will now have to do so.