A Profile in Asbestos Trust Fraud – Former Brobeck Lawyer Gary Fergus (Profile Below)
UPDATE – 1/16/2018
Despite Death of his Client Futures Representative Charles Renfew – Judge Sheri Bluebond ‘allowed’ Fergus to Continue to Act in Bad Faith and Misappropriate Trust Funds — She signed an Order knowing he is an “interested party” – Will the Department of Justice Investigate?
Judge Sheri Bluebond had a chance to end to Fergus’ Decade of Fraud – She didn’t! Why?
A Motion was Filed Displaying Irrefutable Evidence that Gary Fergus is knowingly violating Department of Justice Rules, in an “Interested Party” and litigated against the same Claimants who are now filing claims with the Asbestos Trusts – Gary Fergus should have been removed from all Trusts Activities – What did Bluebond do? Allowed (her buddy) Fergus to Continue to “Steal” from Trust Victims –
Here’s the Motion that was filed (below)
Attached – Judge Bluebond’s Order allowing Fergus to Continue to Misappropriate Trust Funds
Bluebond’s Order Approving Fergus to Continue Misappropriating Trust Funds
I. Fergus – A Fraud and Interested Party
INTRODUCTION
Appellants and Defendants Michael J. Mandelbrot and the Mandelbrot Law Firm (“Mandelbrot) hereby submit this Opposition to Motion for Order to Permit Counsel for Deceased Futures Representative to Participate on behalf of the office of the Futures Representative (the “Motion”).
Mandelbrot appreciates the passing of the Hon. Charles Renfrew (Ret.). However, since the bankruptcy petition filings of J.T. Thorpe, Inc. (2002) and Thorpe Insulation (2002), and all Thorpe Trust matters before this Court, Renfrew has employed an individual specifically prohibited by the United States Department of Justice and the United States Bankruptcy Code since he is not “disinterested” – Gary Fergus. See 11 U.S.C. Section 101(14) and Bankruptcy Code Section 327. Gary Fergus is not “disinterested” by virtue of his 20+ year representation of Fibreboard Corporation, and his former partnership with J.T. Thorpe Trustee and Thorpe Insulation Trustee Stephen Snyder.[1]
Section 327 of the Code provides for the employment of professional persons in a bankruptcy case and prohibits a professional from being employed if they are not disinterested. The term “disinterested person” is defined in the Bankruptcy Code to include one who is not a creditor and “does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for any other reason.” § 101(14) (A) and (C). A person who is disinterested “is one that can make unbiased decisions, free from personal interest, in any matter pertaining to the debtor’s estate.” (Emphasis added). Shat v. Kistler (In re Shat), 2009 Bankr. LEXIS 4547 (9th Cir. BAP Nov. 25, 2009). The reason for the “disinterested” requirement is the need for professionals employed by a bankruptcy estate to make full and candid disclosure of all connections, both when applying for approval of their employment and during the pendency of the case. This duty to disclose must be taken seriously –if a professional fails to do so, he or she risks disallowance of all compensation. In re Sundance Self Storage-El Dorado LP, 482 B.R. 613, 618 (Bankr. E.D. Cal. 2012).
The “adverse interest” language under § 327(a) and the “material adverse interest” prong of the “disinterested person” definition under § 101(14)(C) “telescope into what amounts to a single hallmark.” Martin, 817 F.2d at 180. This unitary hallmark is designed to filter out conflicts that may jeopardize a fair and equitable administration of the bankruptcy estate.
It is equally important in terms of policy that these rules are also meant to preserve the integrity of the bankruptcy system. Therefore, in addition to avoiding conflicts detrimental to a particular case, the rules were drafted to avoid conflicts and questionable relationships that had historically cast the bankruptcy system itself in an unfavorable light. See, e.g., In re Kendavis Indus. Int’l, Inc., 91 B.R. 742, 747 n. 1 (Bankr.N.D.Tex.1988) (citing legislative history of disinterestedness requirement). 482 B.R. 613 (2012)
In re Sundance Self Storage-El Dorado LP, Debtors, 482 B.R. 613 (2012)
II
ARGUMENT
- GARY FERGUS IS A NOT DISINTERESTED BECAUSE HE HELD AND REPRESENTED INTERESTS ADVERSE TO THE ESTATE AS A 20+ YEAR ASBESTOS DEFENSE LAWYER FOR FIBREBOARD CORPORATION
For at least 20 years, and until their Petition for Bankruptcy Protection in 2002, Fergus represented Fibreboard Corporation, an asbestos defendant and former asbestos insulation manufacturer, supplier, and distributor in San Francisco Bay Area. Fergus represented Fibreboard Corporation is thousands of individual cases, including the representation of Fibreboard against the same Beneficiaries (both Present and Future) of the Thorpe Insulation and J.T. Thorpe Settlement Trust.[2] The Thorpe Beneficiaries had previously sued Fibreboard Corporation (represented by Fergus) for damages due to their asbestos disease and later filed claims with the Thorpe Trusts.
As an asbestos defense lawyer (leaving aside his lack of professionalism, morals and ethics), Fergus central argument in every case was that a) asbestos victims (later Thorpe Trust Beneficiaries) weren’t sick; and/or b) asbestos victims weren’t exposed to Fibreboard; and/or c) asbestos victims has alternate exposures (not Fibreboard) to asbestos from other asbestos products (like those of Thorpe Insulation and J.T. Thorpe Settlement Trust). Unquestionably, in every case (since it was his ‘duty’), Fergus had a bias against asbestos victims. Moreover, many of the very same claimants with the J.T. Thorpe, Inc. and Thorpe Insulation Settlement Trusts are individuals who Fergus litigated against while representing Fibreboard Corporation (with Stephen Snyder). How can Fergus possible litigate against an individual and then purportedly be a representative of their future interest?
As a direct result of Fergus’ former employment as an asbestos defense attorney for Fibreboard Corporation, including litigating against J.T. Thorpe and Thorpe Insulation claimants, Fergus has an “interest adverse to the Estate” — Fergus has a bias against J.T. Thorpe and Thorpe Insulation Settlement Trust Beneficiaries/Victims/Creditors and is thus prohibited participating in any Thorpe Trust matters.
- GARY FERGUS IS HAS AN INTEREST MATERIALLY ADVERSE TO THE ESTATE’S INTEREST BY REASON OF HIS CONNECTION WITH MANAGING TRUSTEE STEPHEN SNYDER
The Managing Trustee is of the Thorpe Insulation and J.T. Thorpe, Inc. Settlement Trusts is Gary Fergus’ longtime partner at the law firm of Brobeck, Phleger & Harrison, Stephen Snyder. As a former 20-year partner of Stephen Snyder, Fergus is incapable of acting without bias and/or requisite impartiality, much less exercise objective and independent judgment in this matter. Fergus has and will always side with and act in accordance with the wishes of his former partner, personal friend and co-consumer/recipient of millions of dollars of trust funds in compensation annually.
This patently offensive and unjust alliance and bad faith unity of interest pertains not only to the Mandelbrot cases, but all Trust matters, including the yearly misappropriation of millions in Trust funds to compensate other similarly “interested parties” (such as Counsel Chuck LaGrave of Morgan, Lewis, et al…..). See all Thorpe Trust Annual Reports 2004-2016.
As the attorney for the Futures Representative, Fergus’ fiduciary duty is to “Future Claimants” of the Thorpe Trusts.
Fergus’ former law partner Stephen Snyder’s duty as the Managing Trustee is to “Present Claimants” of the Thorpe Trusts.
As a result of Fergus’ longstanding and irrefutable business/personal relationship with Snyder and by any objective standard, Fergus has not been, will not now and can never be “disinterested” when it comes to this sort of proceeding.
- FERGUS FILED MISLEADING AND FALSE DISCLOSURES BEFORE THIS COURT IN ORDER TO GAIN EMPLOYMENT
Separate and apart from the above, there is compelling evidence that from and after assuming his present “employment” with the J.T. Thorpe Settlement Trust and the Thorpe Insulation Settlement Trusts, Fergus submitted false and misleading Disclosures before this very Court relating to his relationship with Snyder.
The overarching responsibility and duty of those such as Fergus who are appointed by the Court to safeguard and promote the interests of claimants/creditors is to truthfully and comprehensively disclose any and all actual or perceived conflicts of interest whether those be actual, apparent or perceived insofar as the debtor, debtor-in-possession, insiders, creditors and any and all parties in interest. This responsibility and affirmative duty to disclose is not subject to whim or fancy. It cannot be unilaterally exercised on the basis of that which said individuals believe is relevant vs. trivial/irrelevant. No matter how tenuous the connection, no matter how trivial/irrelevant it may appear, these professionals are duty bound to fully disclose the same before assuming the position. Park-Helena Corp., 63 F.3d at 882 (quoting another source).
“The duty to disclose is a continuing obligation as to which the risk of defective disclosure always lies with the discloser. Disclosure that later turns out to be incomplete can be remedied by denial of fees.” In re Kobra Props.,406 B.R. at 402 (citations omitted).
“Even a negligent or inadvertent failure to disclose fully relevant information may result in a denial of all requested fees.” Park-Helena Corp., 63 F.3d at 882.
Thus, if the bankruptcy court discovers that a professional holds an undisclosed adverse interest, the court has the power to deny all compensation and reimbursement of expenses. Section 328(c); Woodcraft, 464 B.R. at 8; Kobra Props., 406 B.R. at 402 (“[T]his Sword of Damocles should be omnipresent in the mind of counsel.”).
Unquestionably Fergus has shirked this responsibility/duty by abjectly and intentionally failing to disclose “all connections” to the debtor and insiders (such as Stephen Snyder).
Fergus’s failure to affirmatively and comprehensively disclose the above referenced connections “insiders” was not the product of innocent oversight or inadvertence. It was intentional. Despite having many opportunities to cure this blatant defect through such disclosure over the years, Fergus has refused to do so.
The longer this Court permits Fergus to perpetrate this unconscionable charade the greater the opportunity for irreparable harm/damage to the rights and interests of all interested parties and most importantly to the Trust Beneficiaries.
- FERGUS HAD AN ADVERSE RELATIONSHIP WITH BENEFICIARY COUNSEL MANDELBROT, YET ENGAGED IN FAVORITISM TOWARDS BENEFICIARY COUNSEL ALAN BRAYTON AND DAVID MCCLAIN
For decades (1980-2000) while representing Fibreboard Corporation, Fergus litigated hundreds of cases against Thorpe Trust Beneficiaries (3rd party plaintiffs) represented by such asbestos plaintiffs’ attorneys as Alan Brayton, David McClain, Jack Clapper, Steven Tigerman, Harry Wartnick and Mandelbrot.
Fergus settled hundreds (if not thousands) of cases with Brayton and McClain alone, thus irrefutably establishing a close and personal relationship with these fellow trust employees and advisers.
Fergus did not settle cases with Mandelbrot and indeed through Brayton and McClain evinced a strong bias and antipathy towards Mandelbrot that has carried over into this arena.
In addressing the standards for removing a trustee due to a conflict of interest, under Bankruptcy Code § 324(a), the Ninth Circuit has recognized that even “a potential for a materially adverse effect on the estate” or the “appearance of impropriety” is sufficient to disqualify that individual/professional. Under Bankruptcy Code §101(14)(C) the definition of a disinterested person “is broad enough to include a [person] with some interest or relationship that would even faintly color the independence and impartial attitude required by the Code.” See Dye v. Brown 530 F.3d 832, 838 (9th Cir. 2008) citing In Re AFI Holding, Inc., 525 F.3d 700 (9th Cir. 2008) (internal quotations omitted).[3]
CONCLUSION
In light of the foregoing, Mandelbrot objects to participation of Gary Fergus as counsel in these remand proceedings or any further Trust matters. An independent, unbiased, and disinterested Futures Representative, free of influence from the biased Fergus, is necessary in these proceedings. Gary Fergus shall not be permitted to participate in any of these proceedings or any future J.T. Thorpe, Inc. or Thorpe Insulation Settlement Trust matters. Michael Mandelbrot and the Mandelbrot Law Firm reserve all rights, including the right to seek disgorgement of Trust monies from Fergus, with respect to any such request.
Dated: Respectfully Submitted:
Michael J. Mandelbrot
Mandelbrot Law Firm
[1] Like Fergus, Snyder is also not “disinterested”. He was a 25-year asbestos defense attorney (and partner with Fergus) with interests materially adverse to the beneficiaries of the Thorpe Insulation and J.T. Thorpe Settlement Trusts as well as a bias against Trust Claimants. Unquestionably, both Snyder and Fergus deceived this Court when submitting their Declaration for Employment by the Trust. Both Fergus and Snyder submitted false and misleading Declarations which failed to disclose their close personal connections.
[2] Not coincidentally, many of these lawsuits filed against Fibreboard Corporation were filed by Thorpe Insulation and J.T. Thorpe Settlement Trust Fiduciaries Alan Brayton and David McClain. As such, Fergus has a long standing relationship and history of settling cases with Thorpe Fiduciaries Brayton and McClain which also creates a bias and favoritism.
[3] Emphasis added
A Profile in Asbestos Trust Fraud – Gary Fergus – Fraud
“In my 30 years of litigating cases, Gary Fergus proved to be the most unethical and dishonest lawyer I ever litigated against,” said one famed Plaintiffs asbestos Lawyer. “Fergus would literally extend depositions for days while victims of asbestos disease were dying right in front of him just so he could make his billing requirements. This is a man solely motivated by ‘stealing’ money from Asbestos Companies and Asbestos Victims. ”
For 25 years, Gary Fergus was an Asbestos Defense Lawyer – billing Fibreboard Corporation 2-3000 hours every year in ‘billable time’. He and his Law Firm (Brobeck) profited millions from Fibreboard.
But then Fibreboard went bankrupt! What was Fergus going to do? His “gravy train” of fraudulent and excessive billing was bankrupt! How was this fraud going to pay for his BMW and his ‘poser’ lifestyle? Simple – More Fraud.
Immediately after Fibreboard went bankrupt, Fergus colluded with Plaintiffs lawyers (his former enemies Alan Brayton and Stephen Kazan) to commit the biggest fraud in the history of Asbestos Trust Litigation and appoint Fergus as the “lawyer” for the Futures Representative of the Western Asbestos billion dollar Trust. This allowed Fergus “unlimited billing” coming out of the Western Asbestos Trust fund. And for 15 years now – that misappropriation by Fergus has been extensive.
Fergus has ‘stolen’ at least 10 million dollars (at least) from funds of the Western Asbestos, J.T. Thorpe, Inc. and Thorpe Insulation Settlement Trust in the last 15 years. At least. And who pays Fergus millions of dollars every year from Trust funds – his old buddy Stephen Snyder (Fergus’ fraud buddy and former Brobeck Partner).
But the Futures Representative who hired Fergus through fraud has passed away (Charles Renfrew). What is Fergus going to do? Could his “million a year” gravy train run out? Fergus is fighting to stay involved – to find another “Futures Representative” to commit fraud and hire him.
We are trying to stop Fergus – Opposition to Emergency Motion for Order – Fergus filed a Motion to Continue as attorney for the Futures Representative and filed ANOTHER fraudulent Declaration with the Court. Let’s hope the Court puts an end to this decade of fraud.
What should happen?
- Gary Fergus should be removed from every Asbestos Trust.
- All Victim’s Monies paid to Fergus shall be disgorged and paid back to the Trust Funds
- Fergus is gone from asbestos litigation forever (the Department of Justice prohibits his work on Trusts).
One can only hope….
Here are Fergus’ (now) buddies who have colluded with him for nearly 2 Decades to Commit Fraud
The definition of “Insider Dealing” and Fraud – Stephen Snyder – Fergus’ former Partner