IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, ET AL. ( Number 3: 09-CV-0988-F
Plaintiff, (
(
vs. (
(
(
JEFFREY BARON, ET AL. (
Defendant. ( January 4, 2011
__________________________________________________________
Hearing on Motion to Vacate Order Appointing Receivership
Before the Honorable Royal Furgeson
__________________________________________________________
A P P E A R A N C E S:
For the Plaintiff: JOHN W. MACPETE
LOCKE LORD BISSELL & LIDDELL LLP
2200 Ross, Suite 2200
Dallas, TX 75201
Phone: 214/740-8662
Email: jmacpete@lockelord.com
RAVI PURI
ATTORNEY AT LAW
1300 Bristol Street North, Suite 200
Newport Beach, California 92260
Work: (949) 756-2446
For the Receiver: BARRY M. GOLDEN
GARDERE WYNNE SEWELL
1601 Elm Street, Suite 3000
Dallas, TX 75201-4761
Phone: 214/999-4746
Email: bgolden@gardere.com
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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EXHIBIT B
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As Receiver: PETER S. VOGEL
GARDERE WYNNE SEWELL
1601 Elm Street, Suite 3000
Dallas, TX 75201-4761
Phone: 214/999-4422
Email: pvogel@gardere.com
For Jeffrey Baron: PETER MICHAEL BARRETT
LAW OFFICE of PETER BARRETT
3500 Oak Lawn Avenue, Suite 700
Dallas, TX 75219
Phone: 214/526-0555
Email: peter@barrettcrimelaw.com
GARY N. SCHEPPS
SCHEPPS LAW OFFICES
Drawer 670804
Dallas, TX 75367
Phone: 214/210-5940
Email: legal@schepps.net
For Daniel Sherman, Chapter 11 Trustee:
RAYMOND J. URBANIK
DENNIS ROOSSIEN
RICHARD HUNT
UFA UFOTUMANA
MUNSCH HARDT KOPF & HARR PC
3800 Lincoln Plaza
500 N. Akard Street
Dallas, TX 75201
Phone: 214/855-7590
Email: rurbanik@munsch.com
Also appearing:
SIDNEY BENNETT CHESNIN
LAW OFFFICE of SIDNEY B. CHESNIN
4841 Tremont, Suite 9
Dallas, TX 75246
Email: schesnin@hotmail.com
GERRIT PRONSKE
ATTORNEY AT LAW
1700 Pacific Avenue, Suite 2260
Dallas, Texas 75201
Phone: 214-658-6501
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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GARY GENE LYON
LAW OFFICE of GARY G. LYON
PO Box 1227
Anna, TX 75409
Phone: 972/977-7221
Email: glyon.attorney@gmail.com
DEAN FURGESON
ATTORNEY AT LAW
4715 Breezy Point Drive
Houston, Texas 77345
Phone: 281-361-9103
Reported by Cassidi L. Casey
United States District Court Reporter
1100 Commerce Street, 14th Floor
Dallas, Texas 75242
Phone: 214-354-3139
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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P R O C E E D I N G S:
THE COURT: Mr. Frye, if you will call the case.
MR. FRYE: 3:09-CV-0988-F, Jeff Netsphere versus
Jeffrey Baron, et al.
MR. GOLDEN: Good morning, Barry Golden, counsel
for the receiver along with receiver, Peter S. Vogel.
THE COURT: Announcements for Mr. Baron.
MR. SCHEPPS: Good morning, your Honor. Gary
Schepps and Jeffrey Barrett, appellate counsel for
Mr. Baron.
THE COURT: Good morning.
MR. SCHEPPS: Thank you very much.
THE COURT: Let's see if we have Mr. Tom Jackson
and Mr. Joseph Cox for Quantec Tech or Novo Point.
MR. GOLDEN: Barry Golden again. I spoke with
Mr. Jackson yesterday, and he advised me at the end of the
last hearing he was excused and didn't believe that he
needed to be here today, and we don't have any issues that
I'm fighting with Mr. Jackson over.
THE COURT: Okay. Great. That's perfect. By
the way, the receiver has filed a request to reimburse
Mr. Cox.
MR. GOLDEN: Yes, your Honor.
THE COURT: That's Mr. Joshua Cox representing
Quantec, Novo Point?
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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MR. GOLDEN: Yes, your Honor.
THE COURT: Explain to me just a minute.
MR. GOLDEN: In the receiver order, it states
the receiver can retain professionals, including
attorneys, for the purposes of the receivership. What we
have done is retained Mr. Cox as well as Mr. Eckels, and
at some point we're going to finalize a couple of the
other Quantec and Novo Point LLC employees and make them
receiver professionals. This way, before we pay them we
will be filing fee aps. We're doing this to make sure
there is transparency with regard to the money we're
disbursing.
THE COURT: I think after the last hearing they
made the receiver aware that Quantec and Novo Point funds
are available.
MR. GOLDEN: Yes, what we have now is a joint
access account so that Mr. Harbin, who's the manager of
Quantec and Novo Point -- he has access as well as the
receiver and receiver's counsel. So what we would propose
is that Mr. Cox and Mr. Eckels, those are the two
attorneys for Novo Point and -- the receiver professionals
who are current or former attorneys for Quantec and Novo
Point -- we have asked them to be paid, and we have
requested that they be paid out of one of the two accounts
that are physically for Quantec and Novo Point, the
CASSIDI L. CASEY, CSR, 214-354-3139
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company bank accounts.
THE COURT: I do have the order for Mr. Joshua
Cox. Is there a motion for anyone else, Mr. Golden?
MR. GOLDEN: The one we filed yesterday, your
Honor, for Mr. James Eckels.
THE COURT: Yes, sir.
MR. SCHEPPS: Your Honor, we object to the Court
proceeding on these receiver motions for expense
reimbursement for receiver professionals.
THE COURT: Thank you very much, sir.
MR. SCHEPPS: Thank you.
THE COURT: Okay. Then I'll look at the other
ones before me.
MR. GOLDEN: And to be clear, your Honor, for
those I think -- I'm not sure how we phrased it in the
motion, and we can pencil the order how we need to, but
those monies for Mr. Eckels and Mr. Cox we believe should
come from the Compass Bank accounts which are the LLC
accounts as opposed to Mr. Baron's personal accounts.
THE COURT: If perhaps you will redo the orders
for me. Because that's not clear in the order.
MR. GOLDEN: We will do that, and at a break I
will hand them to you, your Honor.
THE COURT: That would be great. Thank you very
much. Okay. For the trustee.
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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MR. ROOSSIEN: Dennis Roossien for the Trustee.
My partners Ray Urbanik, Richard Hunt and Ufa Ufotumana.
And the trustee Mr. Sherman is also here.
THE COURT: I have you, Mr. Roossien,
Mr. Urbanik and Mr. Hunt and Mr. Ufotumana, and of course,
the trustee Mr. Sherman.
MR. MACPETE: Good morning, your Honor. Happy
New Year. John MacPete. And on the phone is Ravi Puri
for Netsphere.
THE COURT: Mr. Puri, spell your first name for
me.
MR. PURI: R-a-v-i.
THE COURT: Mr. Puri making an appearance here?
Is he your cocounsel?
MR. MACPETE: He is an attorney, your Honor, but
he's not intending to speak as counsel. He's basically
the client representative.
THE COURT: The court reporter needs his address
and information. You'll get that to her, right?
MR. MACPETE: Do you mind if I send it to Kevin
and he can forward it on?
THE COURT: That will be fine and Kevin can
help, too. Anyone else here for appearance today?
MR. FERGUSON: Dean Ferguson here on behalf of
myself, former attorney for Mr. Baron.
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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THE COURT: Anyone else here? Is Mr. Baron here
this morning?
MR. SCHEPPS: No, your Honor.
THE COURT: So if he were to be called as a
witness, he would not be available? Is that what I
understand?
MR. SCHEPPS: He doesn't appear on any witness
list, your Honor.
THE COURT: If I were to call him as a witness
he would not be available to me?
MR. SCHEPPS: Yes, we could have him here.
THE COURT: Okay. Good.
MR. SCHEPPS: If the Court so desires.
THE COURT: I may consider that at some point in
the hearing.
MR. ROOSSIEN: Your Honor, I would mention in
that regard that Mr. Baron was directed to be here on the
17th as that matter was continued. I assumed that matter
remained in force. I'm very surprised he's not here.
THE COURT: Normally, I expect parties to the
case to be present. I don't know why that would not be
the case here.
MR. SCHEPPS: I believe he wasn't feeling well
this morning, your Honor.
THE COURT: Well, maybe he can feel better this
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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afternoon.
MR. SCHEPPS: Maybe he would feel better this
afternoon, and if he's needed, we have a way to reach him.
THE COURT: Thank you, Mr. Roossien. Okay. One
of the first orders of business before we begin the
presentation is the -- I do have lots of documents in
front of me. I also have Mr. Vogel's application for
reimbursement of fees of the receiver and the firm Gardere
Wynne. I do have the application for Mr. Eckels. And we
have to talk about the application under seal.
We have to talk about the letter I received
yesterday from Mr. Thomas about his representation of
Mr. Baron in bankruptcy.
I have the motion for order confirming propriety
of fund management that we will have to take up. I also
want to talk about the Trustee's request that I take
judicial notice, and that's basically that I take judicial
notice of all of the lawsuits that have been -- all the
attorneys that have been involved in all the lawsuits for
Mr. Baron. Yes, Mr. Roossien.
MR. ROOSSIEN: Yes, your Honor, we have tendered
a set of exhibits. They were actually the set of exhibits
that we attached to our response sometime ago now. And
they are either pleadings from this Court, pleadings from
other courts or there are a few that summarize things that
CASSIDI L. CASEY, CSR, 214-354-3139
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are of record in various courts, and so our request is
that the Court take judicial notice of those. I'm
prepared to do that in due course in the case when we get
there.
THE COURT: Excellent.
MR. SCHEPPS: We object to the Court taking
judicial notice of the lawsuits because they are not
relevant to these proceedings, and we also object to the
Court taking judicial notice of the exhibits attached to
the response to our motion to vacate or stay.
THE COURT: Well, you will have an opportunity
to do that when they are presented through the testimony.
MR. SCHEPPS: Also, we would like to reurge our
objection to the Court taking up any matters of the
receiver motions for reimbursement or fund management
because Mr. Lyon is not representing Mr. Baron. And the
Court is taking his money and said he can't hire an
attorney, and he has nobody representing him with respect
to the receiver's motions. I'm only here on the very
narrow issue for the appeal, and I'm appearing under Rule
8(a) of the Federal Rules of appellate procedure. So Mr.
Baron does not have any anybody representing him with
respect to the motions that are made, and we believe by
looking at the motions that came through on PACER that the
receiver is attempting to commingle Mr. Baron's personal
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funds and personal assets with corporate assets to where
he's only the beneficiary of certain trusts that own other
LLC's and corporations, and he has no representation with
respect to that.
THE COURT: It sounds like to me you are
representing him with respect to that.
MR. SCHEPPS: No, I'm not. I'm only here on the
very narrow issue of motion to vacate and stay. I'm only
pointing out what came through the filings in the last few
days.
THE COURT: Mr. Baron made no application to me
to have counsel for these matters.
MR. SCHEPPS: Mr. Lyon is supposed to be
representing him, but Mr. Lyon has sent an e-mail
correspondence to Mr. Baron over Christmas and said that
he's specifically not representing him in any matters
other than with respect to the global settlement. The
Court has taken his money. He doesn't have a lawyer, and
the receiver has made a bunch of motions concerning
Mr. Baron's money, and he doesn't have an attorney to
represent him on that.
THE COURT: We have counsel who just entered the
courtroom.
Mr. Lyon, how are you?
MR. LYON: I got stuck on the train. I
CASSIDI L. CASEY, CSR, 214-354-3139
UNITED STATES DISTRICT COURT
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apologize to the Court.
THE COURT: Mr. Lyon, I'm being told by
Mr. Schepps that your representation of Mr. Baron is
limited in some way
MR. LYON: That's correct. Last time I thought
my appearance was here just to complete the settlement
agreement out of the bankruptcy court because when the
trustee got the documents one of the documents was an
order dismissing this matter. I signed that document at
that time assuming this thing was going to be completed
pretty quickly. Obviously, it was not. And at that point
in time I had not been paid for the longest period of
time. I was here just to complete the settlement
agreement. I'm willing to withdraw at this time. I'm not
being paid. It keeps costing me time and money to come
down here.
THE COURT: I understand that.
MR. MACPETE: As you may remember, at the end of
the last hearing Mr. Lyon brought up the issue of it was
his signature and maybe we could have Mr. Baron have
someone to sign a new one and, your Honor wanted Mr. Lyon
to stay on being counsel of record so the original
dismissal order he signed would still be good.
MR. LYON: Your Honor, I'm at the mercy of this
Court. Whatever the Court wishes to do. I'm here at the
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