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Concorde Resources Corp: Revised Common Issued and Outstanding Reduced by 31%
PORT ST. LUCIE, FL -- (MARKET WIRE) -- 06/14/06 -- Concorde Resources Corp (PINKSHEETS: CCDX) announced today that certain common shareholders have arranged with the Company to surrender 13,217,029 shares of common stock in exchange for CCDX Preferred "B" shares. The Preferred B shares are restricted for two years from issue, pay a 5% annual dividend, and are non-voting until converted. CCDX Preferred B shares are CUSIP 20651U-20-2.
In addition, 2.6m CCDX common shares have been demanded back to certificate from the DTCC by individual shareholders. Upon the completion of these transactions, CCDX common issued and outstanding will be approximately 35.5m shares. 22.3 of the issued and outstanding are restricted under rule 144. CCDX is debt-free.
Management has stated that it will continue to attempt where possible to reduce the issued and outstanding in its ongoing attention to create a fair and orderly market for its public securities. Company management believes "these initiatives are an essential part of the Company's strategy and commitment to effect stabilization in order to assist future acquisitions."
About Concorde Resources Corp.:
Concorde Resources Corp. is a diversified investment conglomeration that develops partnerships and/or acquires control and recapitalizes small high growth businesses in selected business sectors.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made on behalf of the company. All such forward-looking statements are, by necessity, only estimates of future results and actual results achieved by CCDE may differ materially from these statements due to a number of factors. CCDE assumes no obligations to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements. You should independently investigate and fully understand all risks before making investment decisions.
For Investor Relations Contact: Jon Caserta (866) 990-1112 CCDE*ParadigmIR.com
-------------------- Please do your DD. Break some bread with me! Posts: 1138 | From: atlanta | Registered: Apr 2006
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This company is trying to increase their PPS, they stated it clearly in their NEWS today.
"Management has stated that it will continue to attempt where possible to reduce the issued and outstanding in its ongoing attention to create a fair and orderly market for its public securities. Company management believes "these initiatives are an essential part of the Company's strategy and commitment to effect stabilization in order to assist future acquisitions."
The sky is the limit for this one.
-------------------- Please do your DD. Break some bread with me! Posts: 1138 | From: atlanta | Registered: Apr 2006
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Only a matter of time before its trading is halted, the market makers have nothing to do with it. This is a Paul Taylor pump and dump. See my website www.ccdecorp.com . Paul Taylor is the infamous stock frauder who orchestrated the Telatinos scam (now NTCV). Look at the charts for NTCV and you'll see what CCDX will become. Pink Sheets already removed the quote because Paul and his nominees paid a spammer to promote this stock. Paul Taylor is so ruthless that when I was President of NTCV, he forged my name to share conversions. When I announced his fraud, he started the website, rcathepimp.com to try to defame me. I wouldn't invest in this with my enemies' money.
Posts: 16 | From: San Jose Costa Rica | Registered: Feb 2006
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Carl N. Duncan, Esquire cduncan.counselor*verizon.net
Pink Sheets info*pinksheets.com (Attn: Tim)
re: CCDX Opinion letter and request to be quoted on Pink Sheets
Dear Mr. Duncan and Pink Sheets staff:
The opinion letter is materially incorrect at paragraph 9 in that Paul Taylor, majority controller of CCDX, is currently under investigation by the NASD for securities manipulation. In addition, the SEC Miami office is also investigating Paul Taylor's activities. I have been contacted by NASD and asked to disclose information about Paul Taylor's forging my name on documents while I was president of Netco Investments (NCVT), and I turned over the materials. The NASD is investigating manipulation and unusual activities with respect to NCVT, anbd possibly CCDX. The NASD continues its investigation and I am informed has had discussions with witnesses in the last few weeks. In 2005, Paul Taylor issued a false press release inferring that the SEC was satisfied with the documents it received from Netco Investments and incorrectly stating that the SEC interviewed all officers. http://press.arrivenet.com/technology/article.php/657645.html He placed my name on the press release, and I did not authorize it. The SEC never interview me contrary to the claims in the release.
Your opinion letter's claim that management of CCDX was not involved in the mass spamming fails to take into account Paul Taylor's press release that he was involved in stopping the spam. http://press.arrivenet.com/technology/article.php/804389.html . If he did not cause the spam, the question comes about how Paul Taylor determined who it was and how he stopped it. The opinion letter also does not make an explanation as to what party hired Bellwether Reports to promote the stock. Rather, the opinion letter appears to make bald claims that CCDX was not involved and Pink Sheets should require more of an explanation.
The 15c211 does not mention the allege financing by Morgan Guaranty LLC, as stated in the press release issued by Paul Taylor. According to the press release, Morgan Guaranty obtained shares in exchange for over $1,000,000 in financing. Therefore, it is quite suspect that this information is omitted. http://cf.us.biz.yahoo.com/iw/060323/0114377.html
Your client also routinely appears on stock boards promoting his stocks using multiple aliases such as "Aetheum."
In addition, Paul Taylor has previously been sued for stock fraud and settled and/or had default judgments entered against him.
Below is the text of a declaration that was filed today in federal court. It also discusses the fraud by Paul Taylor under oath. I have also filed a copy of a memorandum of law that was filed as to legal counsel in a case where Paul Taylor waived conflict of interest of former counsel while in the supposed capacity of "consultant" to NCVT, even though a judgment of the Court of Common Pleas of Allegheny County, Pennsylvania terminates Taylor's position. Taylor's actions with respect to NCVT have a material impact on CCDX. In fact, CCDX was formerly Ontus Telecommunication which participated in the NCVT/Telatinos false press release scheme.
Therefore, I suggest you correct the omissions in your letter pertaining to investigations for stock fraud involving principals of the company and investigate why the press releases issued pertaining to CCDX seem to differ from the claims in the 15c211 statement.
Very truly yours,
Rodrigo Calderon
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------X
MADISON STOCK TRANSFER, INC.,
CV 06-3926
Plaintiff,
-against-
NETCO INVESTMENTS, INC., and
MARCO CHAVARRIA, DECLARATION OF RODRIGO
CALDERON ARAYA
Defendants.
-------------------------------X
I, Rodrigo Calderon Araya, declare under the penalty of the laws of the United States of America for perjury that the following information is true and correct to the best of my knowledge, information, and belief (28 USC 1746):
1. My name is Rodrigo Calderon Araya. I am a resident of Costa Rica. I live at Calle 32, City of San Jose.
2. From March 2005 through at least February 2006, I was the President and Director of Netco Investments, Inc. Prior to becoming Netco, the company was known as Telatinos and Trezac, among other names. As such, I have performed extensive inquiries into the transactions, and I am competent and knowledgeable to make the statements made herein.
3. During my tenure as an executive officer of the company, I discovered that the "consultant" to the company, Paul Taylor, who was also the person that hired me, engaged in a widespread and massive fraud scheme.
4. Specifically, Taylor would issue misleading press releases touting the future of Telatinos as a voice over internet protocol telephone company, all while knowing that the company had no products, no real clients, and no revenue. The press release included claims of millions of dollars in equipment, funding, and contracts, none of which were accurate.
5. In addition, Taylor used false names such as Simone de Montoya and fictitious company names such as Crobuset, Ltd., of Panama, when filing public documents and issuing press releases.
6. Additional false information included inferences that Telatinos purchased Netco Ltda., a Columbian internet service provider. The reality in that instance was that, apparently, Paul Taylor formed a Belize company by the same name as the Columbian corporation. Telatinos maintained no ownership in any company that was capable of fulfilling the large contracts that were discussed in the press releases. It had no switching equipment, no digital lines, and nothing that could transmit a call.
7. The purpose of the false and misleading press releases was to pump the value of the shares of Telatinos on the Pink Sheets electronic quotation system. All the while, Taylor would cause shares to be issued pursuant to a purported debt instrument which he called a convertible note.
8. Taylor would issue shares in his name, friends of his, and a wide variety of corporations and nominees, and the shares were literally dumped onto the public market. Based on information, Taylor made hundreds of thousands of dollars through his securities fraud scheme.
9. During my tenure as President of Netco, I obtained email communications where Paul Taylor wrote to other persons and notes that he was to receive half of the value of shares issued and sold on the market. I have attached one of the emails hereto as Exhibit A.
10. After discovering these activities, I contacted the transfer agent, Madison Stock Transfer, in an effort to obtain accurate information about the shares of the company.
11. However, I quickly discovered that each time I would make an inquiry, Madison Stock Transfer would relay the information to Taylor.
12. After several weeks of haggling, I obtained a list of the shareholders of Netco.
13. From the list, I discovered that there were new issuances of shares that I did not recognize.
14. I requested copies of the documents from Madison Transfer that supported the transactions.
15. Again, Madison Transfer disclosed to Taylor each and every request and inquiry I made– even after I informed the transfer agent that he was not to disclose my communications because I was conducting an investigation.
16. After several weeks, Madison relented and provided some documents. Upon receipt, I realized that Paul Taylor forged or created my signature on many documents, along with the signature of Jon Miller, including, but not limited to, a transaction that purportedly placed control of the company in to a Belize corporation known as West Indies Sugar and Beet Group, Ltd.
17. I did not authorize the transaction in question, but apparently Madison Transfer Company issued shares based on the forged signatures contained on the document.
18. On February 27, 2006, I received documentation from Paul Taylor, which was signed by Arnoldo Pacheco. It appears that, using the forged and fraudulent issued shares, I was supposedly removed as President of Netco. This is the document that the plaintiff attached to the initial complaint in this case at Entry 1, pages 45 through 46.
19. I called Arnoldo Pacheco. Pacheco admitted to me that he did not know what Netco was. Pacheco stated that Brian Niessen paid him in cash to sign the documents to become president of the company. Pacheco admitted that no shareholder meeting occurred, that he did not review any company documents, and that he was merely signing any document that Niessen would bring him because he "trusted Brian." Pacheco admitted that he never met Paul Taylor and, at the time, never spoke to him. Pacheco admitted that he was nothing more than a nominee for Niessen.
20. After this event, I continued my investigation of Taylor and Netco. I learned that Taylor issued a false and fraudulent press release and attributed the language to me. The press release falsely stated that the SEC completely cleared Netco of all violations of securities laws. In addition, the press release stated that all of the Telatinos assets were transferred to a private company. That private company was dissolved two weeks later by Paul Taylor. The claim was misleading since Netco did not have any assets or true contracts to transfer, and if the said contracts did have the value attributed to them, the company they were transferred to would not have been promptly dissolved. The press release was false and known to be false because the SEC was investigating the company and continues to investigate the company. Furthermore, there were no assets, no customers, no real contracts other than those made by Taylor's nominees, and no facilities capable of performing the services that were described in the various press releases.
21. Based on my determination that the signatures were forged on the various securities, I instructed Madison Stock Transfer to cancel the shares. Madison did not respond to my instruction or communicate in any way with me. Apparently, Madison was not concerned with the fact that Paul Taylor was issuing forged stocks.
22. I have made various disclosures to the Securities and Exchange Commission about the share manipulations that occurred. I am aware from reviewing documents that the SEC continues to conduct an investigation.
23. In addition, I was contacted by agents of the National Association of Securities Dealers, a non-profit quasi-regulatory agency that is granted authority to investigate stock manipulation. John Keaveney, an investigator with NASD, informed my office that the organization was investigating unusual patterns with respect to Netco's shares. I caused the disclosure to Mr. Keaveney of the documents demonstrating the manipulative and false conduct of Paul Taylor.
24. One of the documents that has been disclosed to regulatory agencies, and is currently under investigation by the NASD and SEC, is the transfer by Paul Taylor pursuant to his fraudulent convertible note to Marshal Shichtman for 60,000 shares. I have attached a copy of the share conversion direction hereto as Exhibit B. The conversion also shows that the president of the plaintiff, Madison Transfer, received shares through the conversion as well.
25. Furthermore, my investigation reveals that Mr. Shichtman represented Netco and its predecessor names including the company known as Trezac. Trezac, similar to Netco, was nothing more than a pump and dump scheme perpetrated by Taylor.
26. Shichtman's actions included taking steps to remove Trezac from the DTCC (Depository Trust and Clearing Corporation) system.
27. Shichtman's commentaries and actions were used by Taylor in his press releases about Trezac. I have attached as Exhibit C an example of a press release written by Taylor as to Trezac.
28. However, Shichtman apparently went beyond simply representing Trezac and Paul Taylor. Rather, he participated in media events to discuss how the stock price of Trezac "tripled" after the removal from the DTCC system. As shown by Exhibit D, Shichtman's media events were focused on the price of Trezac/Netco shares.
29. Of course, discussing the value of the stock spurred additional investor interest in Trezac, which was nothing more than a fraud scheme in the first place.
30. As such, I believe that Shichtman's representation of Madison Transfer Company in this interpleader action constitutes an inappropriate collusion and that counsel's conflict of interest is inappropriate. As former officer, and possibly present officer of Netco, I do not waive this conflict. Shichtman's acceptance of shares of the defendant's stock, coupled with his prior participation in activities which increased the value of the stock, along with the fact that the SEC and the NASD are investigating the transfer of stocks by Taylor to, inter alia, Shichtman, makes the representation of the plaintiff particularly repugnant.
31. With respect to the cognovit note, it is bona fide and has been accepted by a court of competent jurisdiction on July 10, 2006. The Pennsylvania courts maintained jurisdiction over the matter under the minimum contacts test for due process. Specifically, I am aware that Netco: (1) Issued press releases targeting investors, including Pennsylvania investors; (2) Had several Pennsylvania investors at all times material; (3) Purchased telephone, mailing, and secretarial services from Pennsylvania; and (4) was purported by Taylor to have terminated voice over IP calls to Pennsylvania lines, although it appears that the claims were false.
Dated this 20th day of August, 2006, in San Jose, Costa Rica.
______________________________
Rodrigo Calderon Araya
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------X
MADISON STOCK TRANSFER, INC.,
CV 06-3926
Plaintiff,
-against-
NETCO INVESTMENTS, INC., and
MARCO CHAVARRIA, MEMORANDUM IN SUPPORT OF
THE EMERGENCY MOTION TO
DISQUALIFY MARSHAL SHICHTMAN
Defendants. AND SCOTT R. COHEN
-------------------------------X
PRELIMINARY STATEMENT
Although this is a motion that he does not enjoy making, the defendant, Marco Chavarria ("Chavarria"), feels compelled to bring to this Court's attention what appears to be a blatant and inappropriate conflict of interest that affects the integrity of these interpleader proceedings. More specifically, an essential part of a true interpleader action is a lack of collusion. The Action for Interpleader alleges and avers, "This action is not brought by collusion with any of the Defendants." See Entry 1, ¶28. Yet, as shown below, both counsel for the plaintiff, Marshal Shichtman ("Shichtman") and counsel purportedly acting for Netco Investments, Inc. (who, in reality, is acting for "consultant" Paul Taylor), must be disqualified because they are indeed in collusion and both have a conflict of interest that is inappropriate for waiver.
First, this is an interpleader action involving fiduciary duties and attorney Shichtman admitted representing both the plaintiff and defendant Netco Investments up to the filing of this case. Second, a "consultant" [1] to a company cannot logically waive the extreme conflict of interest in this case. Third, if the judgment Chavarria holds against Netco Investments, Inc., from the Court of Common Pleas of Allegheny County, Pennsylvania, is lawful, then Chavarria owns the majority of Netco Investments, Inc., and he certainly does not waive any conflict of interest. Fourth, attorney Cohen appears to have been handpicked by Shichtman to purportedly represent Netco Investments. Fifth, the "consultant" cannot hire, on the advice of Shichtman, a neighboring attorney and associate. Sixth, this case involves a blatant and brazen stock fraud by "consultant" Paul Taylor involving the issuance of false and misleading press releases, forgeries of directives to issue stock, and the invention of non-existent officers of the company. Shichtman appears heavily involved in the matters as he: (1) represented Paul Taylor and Netco Investments; (2) publicly discussed in the media how his actions positively changed the stock prices of Netco Investments, Inc. (f/k/a Trezac); and (3) received shares of Netco stock from "consultant" Paul Taylor to the detriment of the shareholders of the company. Indeed, transactions involving issuances of Shichtman's shares of Netco are currently being investigated by the Securities and Exchange Commission and the National Association of Securities Dealers' regulatory division. Depending on Shichtman's involvement in the issuance of shares by Paul Taylor to his office, counsel may even be a witness in this case, related cases, and others.
JURISDICTION AND STANDARDS TO REMOVE COUNSEL
Chavarria recognizes that the relief sought in this motion is not to be taken lightly. Quite frankly, motions to disqualify counsel are generally not favored. Bennett Silvershein Assocs. V. Furman , 778 F.Supp. 800, 802 (S.D.N.Y. 1991). Chavarria also acknowledges that parties moving for disqualification carry a "heavy" burden and must satisfy a "high standard of proof." Evans v. Artek Systems Corp., 715 F2d 788, 791 (2d Cir. 1983).
But if there are doubts, our court of appeals instructs, "doubts should be resolved in favor of disqualification." Cheng v. GAF Corp., 631 F2d 1052, 1059 (2d Cir. 1980), vacated on other grounds, 450 U.S . 903 (1981); see also Hull v. Celanese Corp., 513 F2d 568, 571 (2d Cir. 1975). Thus, a balance must be struck between being "solicitous of a client's right freely to choose his counsel," and protecting the "need to maintain the highest standards of the profession" and the "integrity of the adversary process." Evans, 715 F2d at 792; Government of India v. Cook Industries, 569 F2d 737, 739 (2d Cir. 1978).
Generally, where the same attorney, or members of the attorney's firm, simultaneously represent adverse parties, the attorney and the attorney's firm are to be disqualified from both representations. Cinema 5 Ltd. v. Cinerama, Inc., 528 F2d 1384 (2d Cir. 1976)(adverse representation by two firms having a common partner); Fund of Funds, Ltd. v. Arthur Andersen & Co., 567 F2d 225 (2d Cir. 1977).
Removal of counsel would be appropriate if the Court finds that it was absolutely necessary to preserve the integrity of the adversary process as, for example, where an attorney's conflict of interest undermines the Court's confidence in the vigor of the attorney's representation of his client, or where the attorney is in a position to use privileged information concerning the other side as a result of prior representation. Board of Education of the City of New York v. Nyquist, 590 F2d 1241, 1246 (2d Cir. 1979); see also Koller ex rel. Koller v. Richardson-Merrell, Inc., 737 F2d 1038, 1055-56 (D.C. Cir. 1984), vacated on other grounds, 472 US 424 (1985); Ackerman v. National Property Analysts, Inc., 1993 WL 258679 (S.D.N.Y. 1993).
In this case, we have a serious situation considering this is not an ordinary litigation, but an interpleader action by a plaintiff that avers that it does not know to whom it owes its duty. The interpleader complaint alleged that this is not a collusive action, and, therefore, this Court maintains a duty to assure that it does not become one – if it has not become one already.
BACKGROUND
Netco Investments, Inc. ("Netco") is a Texas corporation. Netco was formerly known as Telatinos and as Trezac International. See Declaration of Rodrigo Araya, ¶2. Plaintiff's counsel, Marshal Shichtman, previously represented both Madison Stock Transfer Company, the plaintiff, and Netco Investments, a defendant. See Entry 1, Action for Interpleader, ¶11.
Counsel for the plaintiff filed with the Action for Interpleader two executed waivers of conflict of interest. The first waiver was executed by the President of the plaintiff, Madison Stock Transfer Company. See Entry 1, page 42. The second waiver, purportedly from defendant Netco Investments is executed by Paul Taylor as "consultant" to the company. Id, page 43. The supposed waiver admits that Shichtman represented the parties "personally and professionally." Id.
A review of the public record reveals that "consultant" Paul Taylor issued press releases on behalf of Netco (formerly Trezac) announcing Shichtman's comments to the Securities and Exchange Commission. Declaration of Rodrigo Araya, ¶27, and id at Exhibit C. Shichtman participated in media events which discussed the share price of Netco (Trezac) and the "tripling" of their value. [2] Id, ¶28, and id, Exhibit D.
Problematic is the fact that Shichtman accepted shares of defendant Netco (Telatinos) in September, 2005, and has or had a financial interest in the company. See Araya Declaration, ¶24; id at Exhibit B.
The Securities and Exchange Commission and the National Association of Securities Dealers are presently investigating unusual issuances of shares involving defendant Netco Investments. Id, ¶22-24. The transactions being investigated include, but are not limited to, the transfer of shares to Shichtman. Id.
During the time that Shichtman received shares of Netco, the "consultant" to the company was engaged in a massive pump and dump stock scheme. Specifically, "consultant" Taylor would issue press releases claiming that Netco (Telatinos) was a telecommunications carrier in Central and South America that received millions of dollars worth of contracts, equipment, and funding. However, Netco had no real customers, no revenue, and no products. The "consultant" to the company invented names for its officers such as Simone de Montoya. The "consultant" went so far as to claim that Netco (Telatinos) purchased Netco Ltda., a Columbian internet service provider, when, in reality just a Belize shell corporation by the same name was formed. Id, ¶¶3-6. The purpose of the issuance of the false press releases was to pump up the value of the shares while the "consultant" caused additional shares to be issued and dumped onto the market pursuant to a purported "convertible note." The "consultant" would issue the shares in his name and to friends and nominees, including a variety of company names. Id, ¶¶7-8. Netco's president, Rodrigo Araya, provided testimony and a copy of an email that the "consultant" took back half of the proceed of the shares that his nominees sold. Id, ¶9. When inquiries were made to the transfer agent, the plaintiff merely alerted the "consultant." Id, ¶¶10-15. When Araya finally received the documentation, he discovered that the "consultant" had routinely forged his name of stock transfer documents include share agreements. The fraudulently issued shares formed the basis of the alleged share votes that purportedly ousted Araya as an officer. Id, ¶16-18. The "consultant" appointed a new president, Arnoldo Pacheco, who admittedly signed Netco documentation for a few hundred dollars. Id, ¶19. The new "president" admitted that he did not have any shareholder meeting, never even spoke with Paul Taylor at the time, and did not know what Netco was. Id. After this discussion, Araya continued to investigate and discovered that the "consultant" previously issued a press release that claimed that all of Netco's assets were placed into a private company (in other words, the investors received nothing) and that the Securities and Exchange Commission cleared Netco of all wrong doing (when the agency was actively investigating). The problem with this false press release was that the "consultant" used Araya's name when he issued it notwithstanding that he did not have permission. Id, ¶20.
Thus, as stated, counsel for the plaintiff was receiving shares of Netco during the fraud scheme. The transaction is currently under investigation by the SEC and NASD, as is the fraud scheme generally. While Chavarria does not know whether counsel understood what was occurring at the time, it seems patently inappropriate for him to represent the plaintiff in this interpleader action where the adversary is his client and is a company that he has or had a financial interest in. Worse, he could be a victim of the "consultant."
Prior to the filing of this action, and in three written communications to Shichtman, the dual representation was objected to. It was resolved by Shichtman representing the plaintiff and the attorney in the office next door representing defendant Netco. That is, of all the law firms and attorneys in the Eastern District of New York, Netco coincidentally appeared via the plaintiff's counsel's close associate in the same building and on the same floor. Counsel for defendant Netco accompanied counsel for the plaintiff to the courthouse when the suit was initially being filed. Counsel for the plaintiff extensively represented both the plaintiff and the defendant including during the time that it was determined that an interpleader action needed to be filed. Based on the close relationship between the plaintiff and the defendant, it appears clear that the choice of defendant's counsel was no random act of the elements. Chavarria verily believes, and therefore avers, that Shichtman hand picked defendant Netco's counsel and recommended him to "consultant" Paul Taylor.
More crucial to this Court's inquiry is the fact that the documents filed in this case, most notably the waiver of a conflict of interest, indicate that they were not decided by the company's bona fide officers and directors, but rather were signed by a "consultant." To the extent that defendant Netco's counsel was retained by the "consultant," and not by the company, then a serious situation exists. This matter warrants an appropriate inquisition.
DISCUSSION
I. In an interpleader action by a party claiming that it does not know to whom it owes a duty to, it is inappropriate for counsel to represent the plaintiff when he has an extensive representative history with one of the defendants.
An action in interpleader constitutes an equitable proceeding. The plaintiff seeks a discharge of liability while allowing the claimants to litigate their right to property. Ordinarily, an interpleader action is not to be collusive in nature. Hence, the allegation in the initial pleading in this case, "This action is not brought by collusion with any of the defendants." See Entry 1, ¶27. In a non-collusive action, it is imperative that the proceedings not be tainted with a blatant conflict of interest.
In this case, counsel for the plaintiff admits he has an extensive history of representing both the plaintiff and defendant Netco, along with its "consultant." Counsel represented both parties even after it was determined that an interpleader action needed to be filed.
Indeed, the Action for Interpleader contains documents that appear proprietary to defendant Netco including resolutions and other materials. As such, an inference of collusion is present.
Chavarria respectfully submits that this interpleader action is all about duties owed, and counsel owes his duty to both the plaintiff and the defendant. In this type of case especially, counsel should be disqualified even with the waiver.
II. A "consultant" [3] to a company cannot logically waive the extreme conflict of interest in this case.
In this case, defendant Netco's purported waiver of the conflict of interest was executed by a "consultant" to Netco Investments. The Webster's Unabridged International Dictionary defines a "consultant" as one "who gives professional advice or services in the field of his special knowledge or training, as a consulting physician or engineer." See Montgomery County v. Microvote Corp., 175 F3d 296, 302 (3d Cir. 1999), citing Webster's Third New International Dictionary of the English Language, Unabridged, 490 (1966); see also U.S.M. Corp. v. First State Ins. Co
., 37 Mass. App. Ct. 471, 641 N.E.2d 115, 117 (1994) (adopting Webster's definition of consultant), aff'd in part and rev'd in part, 420 Mass. 865, 652 N.E.2d 613 (1995).
The Court here is faced with a clear and admitted conflict of interest. However , the person who supposedly waived the conflict of interest is a "consultant," not a bona fide officer of the company. A "consultant," supposedly hired to provide advice, does not possess authority to waive the rights of the corporation and its shareholders. More importantly, as stated in footnote 3, the "consultant" in this case was terminated pursuant to a judgment of the Court of Common Pleas of Allegheny County, Pennsylvania, which remains in effect. Thus, the waiver constitutes a contempt of the judgment of a court of competent jurisdiction that this Court must honor pursuant to 28 USC 1738, so counsel should have demanded more before he prepared and filed the instant interpleader action knowing he had a serious conflict of interest. The authorization of a "consultant" simply is not good enough for this Court to overlook the conflict.
III. The judgment Chavarria holds against Netco Investments, Inc., from the Court of Common Pleas of Allegheny County, Pennsylvania, is lawful, Chavarria owns the majority of Netco Investments, Inc., and he does not waive any conflict of interest.
This is not a case where Chavarria merely presented a cognovit note to the plaintiff and demanded action. On the contrary, Chavarria possesses a confessed judgment from the Court of Common Pleas of Allegheny County, Pennsylvania, that adopted the cognovit note. Judgment was entered on July 10, 2006. Chavarria v. Netco Investments, Inc., GD 06-016159 (CCP Allegheny, PA). The judgment of the state court must be honored by this Court pursuant to 28 USC 1738. Chavarria filed sealed copies of the exemplification of the record and invokes the Full Faith and Credit Act.
The terms of the Common Pleas judgment clearly state that the "consultant" can not longer bind the corporation ("Upon the filing or execution of this Cognovit Note, Netco will not recognize Paul Taylor as having any authority, control, or other consultancy authority over the corporation. Paul Taylor's services as a 'consultant,' de facto officer, de facto agent, etc. shall be deemed terminated…)."
The terms of the Common Pleas judgment also make it clear that Chavarria controls Netco.
The Action in Interpleader, ¶23, alleges that both defendants have "prima facie colorable claims."
Respecting that Chavarria may effectively own the majority of Netco, he repeatedly stated that he does not authorize counsel to represent the plaintiff. Counsel should recognize that he may have a duty to Chavarria as judgment holder and that a "consultant" cannot waive that duty.
As such, it is patently inappropriate for counsel to represent the plaintiff in this interpleader action when he previously acted on behalf of the defendant. No evidence exists that there is a valid waiver of the conflict.
IV. Counsel for the plaintiff cannot represent the plaintiff because of his involvement in publicly promoting the value of the defendant's stock, accepting shares of the defendant corporation's stock, and because regulatory agencies are presently investigating transactions involving plaintiff's counsel and the so-called "consultant" to the defendant corporation.
The Declaration of Rodrigo Araya presents evidence that an extensive stock fraud operation was orchestrated by the "consultant." The scheme involved issuing press releases to increase the value of the stock. In this case, counsel for the plaintiff previously represented the company with respect to matters designed to increase the value of the stock as well. Chavarria is not suggesting that counsel knowingly participated in the stock fraud, but evidence exists that counsel participated in media interviews bragging that after his legal actions, the price of the stock increased three-fold. Investors ultimately lost everything, over and over again, due to fraud and reverse stock splits designed to force out the company's owners.
Moreover, just last year counsel received shares of Netco stock from the "consultant." The shares, as are other issuances of shares by the "consultant," are the subject of an active investigation by the SEC and the NASD.
With the above in mind, counsel may be a witness in this case, he may be a target in the fraud investigation, or he may have been defrauded by the "consultant" and used as a pawn. Either way, this is not the kind of conflict of interest that the "consultant" can waive.
With all due respect, counsel needs to recognize and take responsibility for his close involvement in this case and his duties to this Court. He simply cannot represent the plaintiff after his past with the "consultant" and defendant Netco.
V. Attorney Cohen appears to have been inappropriately handpicked by Shichtman to purportedly represent Netco Investments.
One thing appears clear, it is no coincidence that defendant Netco ended up with the lawyer next door to counsel for the plaintiff – especially in a case where counsel previously represented both parties. Moreover, it is very rare that counsel for the plaintiff visits the courthouse with counsel for the defendant at the time of the filing of the lawsuit. On the contrary, normally the lawsuit is filed, the defendants are served with process, and then counsel is retained.
Chavarria believes, and therefore avers, that there exists a collusion in this case, contrary to the allegations in the Action in Interpleader. Chavarria hereby asserts that it appears counsel for the plaintiff hand selected counsel for defendant Netco. This is because counsel for the plaintiff represents and has a duty to both the plaintiff and the defendant, so he assisted his prior client find an attorney that he could work with.
Chavarria suggests that this incestual situation constitutes a fraud upon the Court that cannot be tolerated in an interpleader action. This Court must immediately take the steps to inquire as to the source of the representation of defendant Netco including any fee agreements and how counsel was located. Chavarria has no objection to requiring both attorneys to file sealed affidavits explaining this bizarre coincidence and attaching the previously executed fee agreements for both parties.
Chavarria suggests that, if counsel for the defendant was recommended by counsel for the plaintiff, neither attorney can represent the parties.
VI. The "consultant" to Netco Investments cannot hire, on the advice of the plaintiff's attorney, counsel's neighboring attorney and associate.
Viewing the waiver of conflict of interest, it appears that defendant Netco's legal documents in this case are being executed by the "consultant," most probably on the advice of plaintiff's counsel. As Netco has absolutely no assets or revenue, Chavarria believes that the consultant is financing the representation by the attorney next door. Having an attorney appear as a representative of defendant Netco, when the attorney is in reality appearing for the "consultant," constitutes a fraud upon the Court. Chavarria requests that this Court conduct an appropriate inquiry to determine whether counsel for Netco received proper authorization to appear on its behalf, or whether the "consultant" retained the attorney to represent his personal interests.
Chavarria extensively discussed what a consultant is, and he also demonstrated that this Court must honor the state judgment pursuant to 28 USC 1738 that prohibits the "consultant" from acting for Netco. As such, there is a prima facie inference based on the waiver of conflict letter that the "consultant" is acting for Netco, and that cannot be allowed. A consultant is a consultant. Consultants, especially fired consultants, cannot hire legal counsel for a corporation. Therefore, counsel must demonstrate that he was properly hired at the time he initially appeared.
CONCLUSION
Based on the above, we have a situation that warrants remedial action. The Court cannot allow the admitted conflict of interest to be ignored. Counsel for the plaintiff owes his duties to defendant Netco, and he may owe his duties to defendant Chavarria as well. He cannot act in this case. A "consultant" cannot waive the conflict. Counsel for defendant Netco appears to have been hand selected by counsel for the plaintiff. That cannot occur either. Furthermore, if the "consultant" agreed to this representation, then counsel represents Paul Taylor, not the corporate defendant.
As such, with respect, both attorneys must be disqualified.
[1] Said "consultant" was removed from his position by a cognovit note that was accepted on July 10, 2006, and still stands as a lawful judgment of the Court of Common Pleas of Allegheny County, Pennsylvania. Chavarria v. Netco Investments, Inc.,
[2] Of course, the Trezac shares had no value and caused the various investors to lose their money before the "consultant" orchestrated his Telatinos scheme.
[3] Said "consultant" was removed from his position by a cognovit note that was accepted on July 10, 2006, and stands as a lawful judgment of the Court of Common Pleas of Allegheny County, Pennsylvania. Chavarria v. Netco Investments, Inc., GD 06-016159 (CCP Allegheny, PA).
Posts: 16 | From: San Jose Costa Rica | Registered: Feb 2006
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