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WorldCom

At the time, the largest ever, and for many years thereafter...

MCI WorldCom redefined the meaning of a Mega Case bankruptcy. Congress and the Courts have long known of the inherent risks associated with our bankruptcy system, how conflict of interest can feed the corruption of Federal Bankruptcy Judges and DOJ lawyers by Bankruptcy Rings.

If any of us were to imagine that there were some corrupt lawyers in the bankruptcy courts... then just maybe we would find some of these corrupt lawyers running amok in the largest bankruptcy case ever?

Perhaps the criminal corporation which was running the largest series of corporate frauds would foster some amount of fraud and dishonesty in its resulting bankruptcy case...

There is no question that allowing criminals to profit while they break the law will only ensure that criminals will thrive and go on to even greater crimes. Thus we find that MCI / WorldCom is no longer the biggest case ever. Just as excusing fraud upon the court in Leslie Fay with a "10 cents on the dollar" slap on the wrist emboldened immoral executives and their lawyers to construct the WorldCom frauds, so has protecting the WorldCom post petition bankruptcy crimes inevitably brought us our current National Financial Crisis. Allowing the evil pretenders to run wild on the playing field of the U.S. Federal Bankruptcy Court "system" ensured that Lehman, General Motors, and countless banks in our financial system would fail. Feeding the evil who prey upon our nations failures makes them stronger and bolder.

Those who ignore history are doomed to repeat it.

Let's consider the quiet truths in the WorldCom case.

Worldcom: a circumstance where a peculiar plan violating the basic premise of equal recovery for similarly situated claims was confirmed (in violation of Title 11 U.S.C. Section 1129 among other statutes) which gave extra special payments to a certain small group of claims traders.

Who are these claims traders and what relationships do they and their relations have with the bankruptcy lawyers and DOJ lawyers? How does this favoritism relate to the unaffiliated claims trader whose counsel sought Court approval to resign rather than bring this favoritism and related conflict of interest issues to the attention of the Court? Notice how the Court, the U.S. Trustee, and Eliot Spitzer (at the time as Attorney General and Client #9 doing business with organized crime via money laundering) all take great pains to ignore the death threat advice acknowledged as accurate in the transcript sworn before the Court?

And how about this little tidbit, not previously disclosed to Bankruptcy Misconduct readers:

Worldcom: a circumstance where a special court order was sought, and granted, that set up a peculiar process beyond the established Federal Rules of Bankruptcy PRocedure (FRBP) which enabled a certain small group of claims traders to acquire a tremendous amount of claims without adhering to 3001(e) or the protections established for selling creditors. This group of "business people" with alleged financial ties to lawyers running the WorldCom case where thus empowered to acquire hundreds of millions of dollars in claims, far more that we believe possible if the "claims trader favor" order was not signed.

Worldcom where the bankruptcy court became the vehicle where money was diverted under the eagle eye of Marcia, Money, Marcia

The documents related to the WorldCom / MCI megacase in U.S. Bankruptcy Court in Manhattan SDNY (02-13533 lead case number) cases will shed much light, and make a great starting point for a Federal Special Prosecutor. Perhaps a prosecutor could start with the death threat advice as evidenced by a transcript filed before the judge and confirmed as accurate by the attorney who sought the judge's approval to cease inquiry into the conflict of interest and payment favoritism.

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file icon Marcia Goldstein's Petardhot!Tooltip 09/30/2014 Hits: 4499

Marcia!  Marcia!  Marcia!

Some do as we say
We do as our conflicts plot
See how Gold bends rules

Read the discussion about Roberta's Petard here.

Then download WordCom__Weil_Gotshal_Marcia_Goldstein_testimony_07_22_03.pdf for free from BankruptcyMisconduct.com

This transcript, attached as an exhibit to the opposition to Douglas Pick's motion to be relieved as counsel, was affirmed as accurate by Mr. Pick when he complained to the Federal Bankruptcy Judge - Arthur J. Gonzalez, that the conversation was "apparantly" recorded without his knowledge.

 This document is available at the USBC SDNY at the courthouse or on PACER under docket number (17315A) or on BankruptcyMisconduct filename DougTranscript.pdf

The exhibits to the Objection of the ACPOC motion include some awesome documents.  First, it includes at exhibit C the transcript of the discussion between the bankruptcy lawyer and his client wherein the lawyer advises that it is legal to threaten to kill someone.  Secondly, a long series of letters between the client's lawyer and a number of lawyers working for WorldCom.  Specifically, Weil Gotshal & Manges received numerous letters where the creditors lawyer urged that attention be focused on threats by lawyers for Worldcom against the creditor, and on the arbitrary releases being sought which were not authorized by the confirmed plan of reorganization but would have had the affect of releasing WorldCom from all claims derivative of extortion, racketeering, and bankruptcy fraud.

This document is available at the USBC SDNY at the courthouse or on PACER under docket number (17315) or on BankruptcyMisconduct filename 17315NFObj_A.pdf

 

 

In the largest ever bankruptcy case - Worldcom - the bankruptcy attorney who was then currently representing one of the largest unaffiliated (unconflicted) claims traders (Next Factors, Inc.) petitioned the Court to be relieved from continuing as Next's counsel.  The lawyer admits that his reason for seeking permission to withdraw was that he did not want to follow the instructions of his client in seeking to have all potential conflicts between the multi-hundred million dollar fee earning lawyers and their hedge fund clients exposed.  You can't make this stuff up:  The lawyer tried to shake his client off by conveying a death threat during a conversation with the president of Next Factors.  A transcript of the conversation was attached to this filing and the attorney did not merely tacitly acknowledge that the transcript was accurate, he complained that "apparantly" the conversation was recorded without his knowledge.  This is better than a TV show.  People ask me: "but, umm, like wouldn't the government do something?"  Yes, each and every DOJ official, Judge, and officer of the court which learned of the exchange and underlying facts would have done something, provided that they remained true to their oaths to uphold the law, follow professional ethics codes, and defend the Constitution.  Sadly it appears that too many public officials connected to the multi-billion dollar bankruptcy industry hold their allegiances to their own families, bank accounts, racial agendas, and organized crime affiliates above all else.

This document is available at the USBC SDNY at the courthouse or on PACER under docket number (17315) or on BankruptcyMisconduct filename 17315NFObj.pdf

This is the cover page and pertinent portion of the transcript before Judge Arthur Gonzalez during which the lawyer Douglas J. Pick admits that he refused to allow his own associate file the motion he prepared.  The motion sought to have WorldCom's bankruptcy counsel prepare a report which disclosed differences in payments to certain claims traders. 

This could easily reveal any pattern would be established as to timing of payments, reductions in payments, and increases in payments under the intercreditor agreement.  As at least one of the law firms which represented WorldCom has a history that includes failing to disclose conflicts.  The full transcript is available at the bankruptcy court SDNY in Manhattan.

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