David Bergstein vs. David Molner – The Plot Thickens
Last week we reported on the last ditch efforts of David Molner to reverse the tide of losses he has suffered in the bankruptcy cases he initiated against David Bergstein in March of 2010. After more than three years and over 100 separate lawsuits which Molner filed, Molner has failed to prove up a single claim – exposing to the various judges presiding over Molner’s cases that there was never any legitimate basis for the claims. As you might imagine, this does not sit well with judges given our already heavily burdened court system.
As negative rulings have hit Molner’s camp, Molner and all those that were on his payroll may face very serious consequences. David Bergstein asserts that the damages caused by Molner’s scheme exceed $200 million, not including a similar amount of losses which Molner generated in the Aramid Fund under his control. Bergstein has a number of claims against Molner and his cohorts and will likely bring additional claims for costs and malicious prosecution. David Bergstein has already obtained a judgment of $50 Million against one of Molner’s attorneys for fraud. Pursuant to that judgment, Molner, his attorneys and others working under Molner’s direction are likely liable for the judgment amount under indemnity, aiding and abetting and other claims. Molner and those under his employ also remain exposed to claims from the Aramid investors for their losses which stem from the alleged false reporting and looting under Molner’s reign.
Over the last few months, in response to widening losses in court and with little to lose at this point, Molner has cranked up his strategy. Molner used two of the players which I covered in my recent article – Paul Parmar and Alex Ben Block – in a continuing scheme to both extort money from David Bergstein and displace one of the judges who has been ruling in favor of Bergstein.
Over the past few years, Parmar secretly recorded phone conversations he had with Bergstein and used the recordings to extort millions. The very same tapes were again used in a scheme to embarrass and alienate the judge presiding over the bankruptcy cases.
In response to the extortion, in May of this year, David Bergstein filed an extortion complaint against Parmar and Molner (Case number BC508916) which details the plot between Molner and Parmar to blackmail Bergstein for $5 million on the threat of releasing illegally recorded tapes which Parmar made. Bergstein later uncovered that it was the intent of Molner and Parmar to utilize the tapes in order to damage David Bergstein and to inevitably alienate a judge from Bergstein or have the judge removed from the case.
A critical participant of Molner’s latest move is Alex Ben Block of the Hollywood Reporter (Ben Block has published nearly 100 derogatory articles about David Bergstein in a few short years and has been accused by Bergstein of being on Molner’s payroll.) In order to utilize the tapes, Molner needed them made public. Given the court order sealing the tapes, Molner needed someone willing to violate the order; enter Ben Block of the Hollywood Reporter. Parmar and Molner arranged to deliver to Ben Block carefully edited portions of the tapes and arranged for Ben Block to publish a new article and fashioning a misleading conclusion suited to Molner’s needs. The publication of the article was intended to embarrass the judge and conflict him out of the bankruptcy case.
Despite a court order sealing the tapes, and Ben Block being provided with that order in advance, he nonetheless published the article.
Why would Alex Ben Block go through all this trouble again?
In order to effect Molner’s plan, Molner needed Ben Block to use the credibility of the Hollywood Reporter to get the judge’s attention. The Reporter publicized the article last week and at least a portion the intended effect was achieved - embarrassment of the Judge.
However, Molner’s main objective was to have the judge remove himself from the case due to conflict. This would give Molner a new chance to further delay the inevitable.
It is interesting to note that Molner was brazen about his plan. Prior to a hearing in the bankruptcy court which took place last Wednesday, Irv Gross, a partner at the Leven Neale firm (the bankruptcy firm representing Molner) commented to Bergstein’s attorney that he thought the judge would recuse himself from the case. But that’s not what happened.
Thus far, Molner’s attempt to have the judge removed did not work. Last Wednesday, in a hearing held in front of the judge, another one of Molner’s claims against Bergstein was dismissed. During that hearing, as he has done in the last several hearings, the judge reminded Molner’s attorney that the case should be over. The judge also commented that the bankruptcy case was actually really just a two party dispute between David Bergstein and Molner. Bankruptcy law strictly prohibits the use of the bankruptcy court for two party disputes – signaling the judge’s inclination to have the cases dismissed altogether.
After failing again in front of this judge, and with nothing to lose, Molner cranked up his efforts. After his regular litigation and bankruptcy lawyers reportedly refused to honor Molner’s demand to further embarrass the judge, Molner retained a small firm outside of Los Angeles area to file a copy of the Ben Block article with the court. The intent of this filing was to put the article in the judge’s face, attract attention of the larger bankruptcy community, and to apply further pressure on the judge to recuse himself from the case. A hearing is set for next week on the matter.
In last week’s article we reported that Molner paid a law firm $1 Million of the Aramid Funds money to issue a report vindicating Molner. That firm was Reed Smith. Today we learned that Reed Smith has told various parties that if the judge does not voluntarily remove himself from the case by next Wednesday’s hearing, that Molner will make a filing to have the judge disqualified.
Thus far it seems that Molner has not only caused significant losses to the Aramid investors and substantial losses to David Bergstein and many others, but he has grossly abused the judicial process and wasted millions in taxpayer money by taxing the courts here and elsewhere. Molner has employed mafia style tactics throughout his litigation escapade. Now he is employing the very same approach to bully the judge.
We will be standing by to see what happens and report back.