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Motion to Stay the Receivership Fee Disputes.

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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, INC., §
MANILA INDUSTRIES, INC., and §
MUNISH KRISHAN, §
Plaintiffs. §
§ Civil Action No. 3-09CV0988-F
v. §
§
JEFFREY BARON, and §
ONDOVA LIMITED COMPANY, §
Defendants. §
MOTION FOR LEAVE TO FILE: MOTION TO STAY RECEIVERSHIP
PENDING APPEAL
TO THE HONORABLE JUDGE ROYAL FURGESON:
COMES NOW JEFF BARON, and moves this Court to grant leave to file
the following motion to stay the receivership pending appeal because there is no
reasonable basis to keep the receivership in place in light of the procedural posture
of the case.
1. On May 24, 2011, this Court entered an Order [Doc 586] advising the parties
that this Court is stayed from taking further action in the matters involved in the
appeals taken on May 18, 2011.
2. This Court previously entered an Order on March 2, 2011 [Doc 338],
advising that the primary purpose of continuing the receivership was to ensure
that the unpaid attorneys claims against him could be resolved so that the
bankruptcy action could be closed”. That matter is included in the appeal.
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 1 of 8 PageID 24392
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3. The bankruptcy trustee has filed an adversary action in the bankruptcy court
against Mr. Emke regarding “servers.com”.
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The filing of the new adversary
action and the shortly expected counterclaims will prevent the closing and
resolution of the bankruptcy case for some time to come—until discovery is
completed and a trial is held on that adversary action. Resolution of the attorneys
fees claims will therefore not allow the immediate closing of the bankruptcy case
(assuming arguendo the claims would otherwise have an impact on the closing of
the bankruptcy case).
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4. Accordingly, in light of the current procedural posture of this case, there is
no reasonable basis to continue the receivership.
5. This Court may take security for staying the receivership, if this Court
determines such security appropriate.
6. The claims currently listed total $853,000.00 [Doc 562].
7. Jeff has $630,000.00 of his money held in escrow in the bankruptcy court,
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Note should be taken that Mr. Emke had been represented by Mr. Vogel’s law firm when he
sued Ondova with respect to “servers.com”, and that dispute was still pending when this Court
decided to appoint Mr. Vogel as special master in this case. The twisted interrelations between
Vogel, Gardere, Ondova, Baron, and Emke have become untenable with respect to Mr.
Sherman’s latest litigation. Because of the clear conflict of interest involved, it is not possible
for Vogel to properly act to defend Jeff Baron’s interests in the bankruptcy court with respect to
Sherman’s new litigation over the prior “servers.com” litigation. Since Gardere represented
Emke against Ondova and Jeff Baron, Gardere and Vogel cannot now represent any party’s
interest against Emke relating to the very same matter.
2
Notably, since November 2010 Jeff Baron has been 100% neutralized in the bankruptcy
court, and the bankruptcy court recognizes no rights in that court on Mr. Baron’s behalf
recognizing only the receiver as holding all of Mr. Baron’s rights in that court. Yet, in the more
than 6 months that have passed, Mr. Sherman has not closed down the bankruptcy, and has
instead made great pains to expand the bankruptcy and prevent it from being closed, for example
by recently initiating an adversary action against Mr. Emke.
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 2 of 8 PageID 24393
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with approximately half of the sum specifically held as security with respect to
resolution of the Pronske claim. Accordingly, in addition to the $630,000.00
currently held in the bankruptcy case, an injunction prohibiting the liquidation of
$223,000.00 in Jeffs stocks would provide full security for the entire claims total.
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8. There are also grounds that security in a substantially reduced amount would
also be reasonable, if security is required. Although no discovery, no expert to
provide an opinion in support of Mr. Baron, and no investigation has been allowed,
over $672,000.00 of the $853,000.00 in claims have already been shown
groundless as a matter of law:
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a. With respect to the Broome claim, Broome’s own evidence
clearly establishes that he agreed to a $10,000.00 per month cap on
fees incurred in any month. Broome’s claim is based on the irrefutably
false representations of Broome that his contract contained no such
provision.
b. With respect to the Crandall claim, Crandall’s invoice that
explicitly states Crandall is billing at a flat rate proves that she was
working at a flat rate (for which she was fully paid) and not the hourly
$300/hour rate she now claims.
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Jeff had more than a million dollars in cash in the bank, that appears to have been distributed by
this Court for other purposes.
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In reviewing groundlessness of the claims a compelling question is raised: Why did so many
attorneys believe that their clearly groundless claims would be well received by Mr. Vogel ?
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 3 of 8 PageID 24394
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c. With respect to the Pronske claim, Mr. Pronske admitted that he
was paid a fee of $75,000.00 up front, and provided no contract or
engagement letter. Pronske states in his claim affidavit There are no
engagement agreements relating to the representation”. For almost a
year after receiving a $75,000.00 fee and working on the case,
Pronske sent no bill, no invoice, no demand for payment, no hourly
work report, and no other document of any type alleging that the flat
fee payment was actually a ‘retainer’. Almost a year after he had been
paid, Pronske suddenly decided that some two hundred thousand dollars
in fees which had never been billed or even reported, were suddenly past
due and owing.
d. With respect to the Ferguson claim, Fergusons claim submission
clearly establishes that Ferguson perjured himself when he testified
before the Court. In his live testimony Ferguson falsely testified his
agreement to be paid a flat rate covered the period only to August 21, and
after August 21, Ferguson’s rate was $300/hour. However, Fergusons
own contract produced by him as part of his ‘claim’– establishes
unambiguously that the flat rate was through August 31. That rate
(pursuant to the clear and express written contract terms, for all of
Ferguson’s work from inception) was $22,000.00, and Ferguson admits
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 4 of 8 PageID 24395
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he was paid that amount in full. Ferguson’s claim submission offers a
very different story from Fergusons prior sworn live testimony. No
longer does Ferguson claim he is entitled to more money than the flat fee
he contracted for because he was required to work 99% of his time rather
than 33% of his time. Instead, Ferguson now claims he is entitled to
more money than he contracted for because he was defrauded’.
Ferguson’s claim is that Jeff fraudulently’ represented that the money
would be paid from Jeffs million dollar trust and not from Jeffs pocket
because Jeff was personally destitute (according to Ferguson).
However, the trust’s money is just as green and in US Dollars just the
same as if it had come from Jeffs pocket. The fraud’ alleged as to
where the money to pay the bill came from (the million dollar trust or
Jeffs pocket) has no materiality as to rate agreed to by Ferguson.
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e. With respect to the Powers and Taylor claim for a contingency
fee’, pursuant to their own contract such a fee is not due. Moreover,
Mr. Taylors own email to Jeff proves they had not claimed the
contingency fee at the time or immediately after the global settlement.
Taylor only started suggesting that a ‘contingency fee was due
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Notably, Ferguson has been sued on multiple occasions and was repeatedly found guilty of
wrongfully causing literally millions of dollars in losses to others. Ferguson at the time he
approached Jeff for work, was in the process of escaping ultimate liability for the damages he
caused and was adjudged to have caused, by his use of the bankruptcy rules to obtain a discharge
of his liability.
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 5 of 8 PageID 24396
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(originally for half the current amount claimed) after Pronske began his
‘scorched earth’ policy against Jeff.
f. With respect to the Lyon claim for $300/per hour (ie, seeking
$260/hour above the $40/hour he was paid), Lyons own email
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proves
without ambiguity that his hourly rate was the $40/hour he was paid
and not the $300/hour now claimed.
g. With respect to the Schurig claim, Schurig’s ‘claim’ affidavit
admits that 99% of her ‘claim’ is for work done on behalf of
“Asiatrust”, (a company owned by Ms. Schurig’s colleague) that is
neither owned, nor controlled by Jeff Baron, and has itself filed claims
against Jeff and/or Ondova. Notably, Ms. Schurig has, per her claim no
contract with Asiatrust for the $100,000+ fees claimed due from them.
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h. With respect to the Garrey claim, Mr. Garrey’s own claim evidence
establishes that he worked at most two weeks and that his monthly
billing rate was capped at $8,500.00. $1,000,000.00 (one Million) was
originally claimed as the amount of Garrey’s claim for two weeks of
alleged work, and the current claim of $52,000.00 is equally as frivolous.
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Bragging about his $40/hour fee providing ‘more bang for the buck’ and seeking more work on
Baron’s behalf.
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The gross failure to provide a documented accounting for the $2,000,000.00 Mr. Baron placed
with Ms. Schurig to hold in trust and which has now been reported “gone” has been addressed in
prior motions.
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 6 of 8 PageID 24397
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i. With respect to the Friedman and Hall claims, not a single page of
documentation was provided to the undersigned counsel in support of the
claims. Mr. Vogel and his partners have represented that all of the
materials they received were turned over to the undersigned.
Accordingly, the Friedman claim and the Hall claim are wholly
unsupported.
9. For further cause, the argument of Mr. Baron’s appellate briefing is attached
hereto as Exhibit “A” and incorporated herein by reference.
WHEREFORE, Jeff Baron requests the Court to immediately stay the
receivership pending resolution of the issues on appeal to the Fifth Circuit.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
Drawer 670804
Dallas, Texas 75367
(214) 210-5940 - Telephone
(214) 347-4031 - Facsimile
E-mail: legal@schepps.net
COUNSEL FOR JEFF BARON
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 7 of 8 PageID 24398
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CERTIFICATE OF SERVICE
This is to certify that this document was served this day on all parties who receive
notification through the Court’s electronic filing system.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
CERTIFICATE OF CONFERENCE
This is to certify that the undersigned conferred with counsel for: (1) Mr. Vogel by
email and the receiver takes no position and does not oppose the relief requested,
and (2) Mr. Sherman by email and they oppose.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
Case 3:09-cv-00988-F Document 590 Filed 05/31/11 Page 8 of 8 PageID 24399


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