No. 10-11202
In the
United States Court of Appeals
for the Fifth Circuit
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NETSPHERE, INC. Et Al,
Plaintiffs
v.
JEFFREY BARON,
Defendant-Appellant
v.
ONDOVA LIMITED COMPANY,
Defendant-Appellee
▬▬▬▬▬▬▬▬▬▬▬▬▬
Appeal of Order Appointing Receiver in Settled Lawsuit
▬▬▬▬▬▬▬▬▬▬▬▬▬
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Cons. w/ No. 11-10113
NETSPHERE INC., Et Al, Plaintiffs
v.
JEFFREY BARON, Et Al, Defendants
v.
QUANTEC L.L.C.; NOVO POINT L.L.C.,
Appellants
v.
PETER S. VOGEL,
Appellee
▬▬▬▬▬▬▬▬▬▬▬▬▬
From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
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RESPONSE OF QUANTEC LLC TO VOGEL’S MOTION TO RISK
QUANTEC’S ASSETS FOR NO CORPORATE BENEFIT BECAUSE
VOGEL WANTS TO BE INVOLVED IN PROSECUTING DAUBEN
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Case: 10-11202 Document: 00511716469 Page: 1 Date Filed: 01/06/2012
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Cons. w/ No. 11-10289
NETSPHERE, INC., ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant- Appellant
v.
DANIEL J SHERMAN, Appellee
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Cons. w/ No. 11-10290
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, ET AL, Defendants
v.
QUANTEC L.L.C.; NOVO POINT L.L.C., Non-Party Appellants
v.
PETER S. VOGEL, Appellee
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Cons. w/ No. 11-10390
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant – Appellant
v.
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
v.
ONDOVA LIMITED COMPANY, Defendant – Appellee
v.
PETER S. VOGEL, Appellee
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Cons. w/ No. 11-10501
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant – Appellant
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P.,
Appellant
v.
PETER S. VOGEL; DANIEL J. SHERMAN, Appellees
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CONTENTS
ARGUMENT & AUTHORITIES ................................................................................. 4
I. Response Overview ................................................................................................. 4
II. Vogel’s Material Misrepresentations Regarding Jeff Baron .................................. 5
A. Vogel Materially Misrepresents the Scale of ‘Offending’ Names.......... 5
B. Vogel Materially Misrepresents Baron’s Role......................................... 6
C. Vogel Materially Misrepresents that “Dauben been a close friend
and business associate of Jeff Baron.” and “Dauben regularly serves
as Baron’s media outlet” ................................................................................ 7
D. Vogel Erroneously Argues that Baron joked about “deathtojews” ...... 9
III. Vogel Seeks to Place the Entire Asset Base of Quantec at very Real
Danger of Catastrophic Loss ...................................................................................... 9
A. The Names would be at Material Risk ..................................................... 9
B. Quantec LLC’s Assets are not for Vogel’s Retaliation......................... 11
C. No Nexus between the Names and the Crime........................................ 11
D. Ethical Duties do not Allow Disclosure by a Fiduciary for Prior
Third Party Crimes....................................................................................... 12
IV. Vogel’s Selective Outrage ................................................................................... 12
A. Vogel’s Promotion of Pornography........................................................ 12
B. Vogel’s Desire to ‘Help’ the Prosecution is Selective, he has not
Sought to Help the Pedophilia and Child Rape Prosecutions against
the Plaintiff’s Counsel, MacPete.................................................................. 13
V. Vogel’s Motion is a Manufactured Billing Exercise ............................................ 14
A. Not Designed to Conserve the Receivership Assets............................... 14
B. Vogel’s Seeking to Use Quantec LLC for His Personal Purposes ....... 14
PRAYER ........................................................................................................................ 15
CERTIFICATE OF SERVICE .................................................................................... 16
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TO THE HONORABLE JUSTICES OF THE FIFTH CIRCUIT COURT OF
APPEALS:
COMES NOW Quantec LLC, Appellant, and makes this Response to
Vogel’s motion seeking to risk Quantec’s assets for no Corporate benefit because
Vogel wants to be involved in prosecuting Joey Dauben.
1
The attached Exhibit
“A” is incorporated herein by reference.
ARGUMENT & AUTHORITIES
I. Response Overview
There are two parts to Vogel’s motion. One part, as discussed below, is
Vogel’s false representations designed to materially mislead this Honorable Court
regarding Baron and having nothing to do with the substance of Vogel’s requested
relief. For example, Vogel’s argument falsely represents to this Honorable Court
that (1) “Mr. Baron’s livelihood largely involves profiting off the Sex Names, the
Hate Names, and the Child Sexual Assault Names”;
2
(2) “Dauben [has] been a
close friend and business associate of Jeff Baron.”
3
that (3) “Dauben regularly
serves as Baron’s media outlet”; and (4) that Baron joked about a website named
“deathtojews.com”.
4
1
“1-04-12 SEALED MOTION filed by Appellee Mr. Peter S. Vogel in 11-10113, 11-10290, 11-
10390, 11-10501 to disclose evidence to district attorney.” (Document 00511713784 filed on
12/23/2011 in case 10-11202).
2
Vogel’s Motion at page 8.
3
Id. at page 5.
4
Id. at page 6.
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As discussed below, the other part of Vogel’s motion is a request to
recklessly place, for absolutely no legitimate corporate interest or business
purpose, the value of Quantec LLC’s asset at catastrophic risk, as follows:
(1) Vogel’s argument fails to inform this Honorable Court that the likely result of
the disclosure Vogel so eagerly seeks would be the catastrophic loss
in value of
the domain name assets; (2) Vogel’s argument misleadingly misrepresents to this
Honorable Court the context of the ‘offending’ domain names
(they are not a “large
extent” of the portfolio as misleadingly misrepresented by Vogel, but make up less
than one fourteenth one-hundredths of one percent of the domains managed by
Dauben), and (3) Vogel’s argument substantially errs with respect to a fiduciary’s
ethical duties regarding disclosure of the trade secrets of a company for which an
attorney acts as a fiduciary.
II. Vogel’s Material Misrepresentations Regarding Jeff Baron
With respect to Vogel’s misrepresentations that “Mr. Baron’s livelihood
largely involves profiting off the Sex Names, the Hate Names, and the Child
Sexual Assault Names”, Vogel’s argument makes two conflated material
misrepresentations to this Honorable Court, as follows:
A. Vogel Materially Misrepresents the Scale of ‘Offending’ Names
First, Vogel misrepresents to this Honorable Court that the domain name
income “largely” involves ‘Sex names’, “hate names”, and “child sexual assault
names”. According to his reports, Dauben managed over 700,000 domain names.
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Of those domains, based on Vogel’s listing, less than one fourteen one-
hundredths of one percent are ‘sex names’ or so called ‘hate names’. Vogel’s
attempt to pass off one fourteen one-hundredth of one percent of Dauben’s
managed domain name inventory as a “large” portion of the inventory is materially
misleading.
B. Vogel Materially Misrepresents Baron’s Role
Secondly, Vogel misrepresents Baron’s involvement with Quantec LLC.
Baron has received zero (none) livelihood from Quantec LLC or the Quantec LLC
domain names. More than half a decade ago Baron in order to fund medical
research to find a cure for Type I diabetes created and funded the Village Trust with
an asset base that was valued at over a hundred million dollars. Quantec LLC is an
asset of the Village Trust and Baron neither owns Quantec LLC nor manages it.
Baron, moreover, has not taken one cent for himself personally from the
independent diabetes research trust. The trust, however, has attracted a very
long line of attorneys’ outstretched hands, and, incredibly, by brazen abuse of the
court system such as that undertaken by Vogel, attorneys have diverted literally all
of the multi-million dollar trust income away from medical research funding, and
into their own pockets.
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C. Vogel Materially Misrepresents that “Dauben been a close friend and
business associate of Jeff Baron.” and “Dauben regularly serves as
Baron’s media outlet”
i. Dauben is not a friend nor ‘outlet’ of Baron
Contrary to Vogel’s fictitious averments, Dauben is neither a friend of
Baron, nor serves as his ‘media outlet’. Baron has not spoken to Dauben more
than three times (at most) in the past three years. Baron has never employed
Dauben nor been in business with Dauben. Instead, Dauben’s services were
apparently used by the Virgin Islands management of Quantec in 2007, and
Dauben has been befriended by Damon Nelson and employed by Vogel and
Sherman.
ii. Dauben, not by coincidence, is intimately involved with the
affairs of Sherman/Vogel/Nelson
Sherman/Vogel/Nelson have engaged in extensive communications
and
correspondence with Dauben, and Nelson has gone so far as to provide Dauben
with free office space. Dauben appears to have acted on the instructions of Vogel
and was going to submit a large claim against Baron for Vogel to pay as receiver,
until it was pointed out in motions before this Honorable Court that Vogel was
actually going to take the Dauben money for himself. When Dauben discovered
this, apparently on the internet, he appears to have felt deceived by Vogel and
published an article that Vogel is a “dirty filthy crook”. Vogel has since became
involved in Dauben’s alleged criminal past, and immediately after the Vogel article
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was published, charges that were rejected half a decade ago were revived, and
within 30 days Dauben was indicted. The charges— for consensual sex with a 15
year old teenager during a church outing— have nothing to do with Quantec LLC.
Vogel appears to be preemptively attempting to distance himself from
Dauben who appears to have been working at Vogel’s direction (through Nelson
who befriended Dauben) to publish offensive statements about court personnel so
that Vogel could falsely accuse Baron of making the offensive statements (as Vogel
has now done). Facts that suggest Dauben has been working with Vogel are as
follows: (1) the extensive communications between Vogel and Dauben (through
Nelson and Sherman/Urbanik) that were not disclosed by Vogel to this Honorable
Court, (2) the favors provided Dauben (free office space provided by Nelson) that
were not disclosed by Vogel to this Honorable Court, (3) apparently, cash payments
made by, or requested by Sherman/Urbanik to Dauben, that were not disclosed by
Vogel to this Honorable Court, (4) Vogel’s attempt to have Dauben make a large
‘claim’ to be paid by Vogel, as receiver, (derailed when it was disclosed in court
filings that the money would end up in Vogel’s pocket, not Dauben’s), (5) Baron’s
lack of contact with Dauben, and (6) Vogel’s history of prior attempts to actively
set-up the false appearance of Baron ‘wrongdoing’
5
.
5
See, e.g., GENERAL RESPONSE TO MOTIONS FOR FEES FOR VOGEL, HIS
PARTNERS, AND OTHER “RECEIVER PROFESSIONALS” (Document 00511600278 in
case 10-11202 filed on 9/12/2011) (describing the Vogel’s orchestrated attempt to falsely make it
appear that Baron was harassing, intimidating, and ‘obstructing’ (at pdf page 14, et.seq.); and
SR. v5 pp102-110 (the emails with Vogel’ office’ digital IDs proving the affair was an
orchestrated set-up by Vogel).
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D. Vogel Erroneously Argues that Baron joked about “deathtojews”
Contrary to Vogel’s erroneous averments, Baron has never had anything to
do with, has no knowledge of, nor has he joked about “deathtojews”. If a client
owned or joked about “deathtojews.com” any other so-called ‘offensive’ domain
name, the undersigned would defend the fundamental First Amendment right of
every American to free speech. Moreover, “deathtojews.com” could be a non-
offensive historical site about the historic movements from the Biblical Story of
‘Ester’ and Persia, to the Nazi atrocities, etc. However, the reference in Vogel’s
argument has no underlying factual basis— Baron did not own, discuss, or joke
about “deathtojews”. Rather, Vogel’s argument is fictitious— and clearly
irrelevant to the relief sought in Vogel’s motion.
III. Vogel Seeks to Place the Entire Asset Base of Quantec at very Real
Danger of Catastrophic Loss
A. The Names would be at Material Risk
Vogel’s argument fails to disclose to this Honorable Court the incredible cost
Vogel risks in satisfying his personal desire to be involved with the criminal
prosecution of Joey Dauben. By placing the list of Quantec LLC’s names in the
hands of the District Attorney, the names would be at material risk of public
disclosure through a Freedom of Information request. See e.g., Department of
Justice v. Landano, 508 U.S. 165 (1993). Such a disclosure of Quantec LLC’s
domain list would be catastrophic for multiple reasons, as follows:
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First, especially where the names have been listed as relevant to criminal
activity, and where the domains have been grouped for monetizing, there is a high
likelihood that Google would add the names in bulk to its domain name blacklist.
The names would no longer be allowed in search results
and their value would
be reduced by 95% to 99% in value. Accordingly, Vogel’s request recklessly risks
destruction of the company. Secondly, Vogel has deactivated all of the active site
content, so that no name currently has commercial activity supporting trade name
rights. Every name thus represents an ‘undeveloped business idea’. By disclosing
the secret list to the public and to Quantec LLC’s competitors, if the domain list is
made public, every domain name idea could be stolen by competitors before
Quantec LLC is able to develop the name.
Thus, if competitors are allowed to see what names Quantec LLC owns, it
will allow them to purchase around Quantec LLC’s internet territory, and if the
competitors develop those domains first, the domains owned by Quantec will be
reduced in value to almost nothing. For example, if Quantec owns “fishshoes.com”
“fishslippers.com” and “fishflops.com” it can develop a website presence based
on the “Fish” label for shoes. However, if a competitor knows in advance what
websites are owned, the competitor can pre-empt the ‘Fish’ label by (1) registering
or purchasing competing domains, or (2) registering a tradename before the
domains can be used. Thus, if “Fishflops” were yet undeveloped, a competitor
could register the “Fish” label for shoe sales. Or, a competitor could register
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“Fishsocks.com”, “Fishpuppies.com”, “Fishsandals.com”, etc. and go to market
before Quantec. Each domain name in the company’s inventory of undeveloped
domain names is a valuable trade secret business idea
. Thus, releasing the
domain name list is gratuitously giving away to the world all of Quantec’s
trade secret business ideas. It is business suicide.
B. Quantec LLC’s Assets are not for Vogel’s Retaliation
Vogel may be personally offended that Dauben called him a dirty filthy
crook after Dauben discovered that Vogel was not really his ‘friend’ and the money
Dauben thought Vogel was arranging to go to him was really going to end up at
Vogel’s law firm instead. However, the assets of Quantec LLC do not exist to
serve the ego and personal retaliatory motives of Peter Vogel. Such a use of assets
is a gross violation of a fiduciary’s duties.
C. No Nexus between the Names and the Crime
Further, There is no nexus between managing domains and Dauben’s alleged
sex with a 15 year old teenager on a church picnic. Moreover, were the so called
‘hate’, and ‘sex’ names make up less than one fourteen one-hundredth of one
percent of the domains Dauben managed, there is no probative nor logical
relevance to the crime Dauben is accused of. Moreover, if the ‘sex’ names were
relevant, only those names could be disclosed—there is clearly no need to
needlessly disclose all
of Quantec LLC’s trade secret domain names.
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D. Ethical Duties do not Allow Disclosure by a Fiduciary for Prior Third
Party Crimes
Vogel’s argument errs in finding an ethical duty to disclose valuable
corporate trade secrets to assist in prosecution of a potential crime of a third party.
Contrary to Vogel’s erroneous argument, the ethical duties allowing disclosure of
information held by a fiduciary, require two key elements missing in the present
circumstance, as follows: (1) that the criminal act was that of the client
for whom
the secrets are held by the fiduciary, and (2) that the disclosure is necessary to
prevent commission of the crime, or if the attorney was involved in the
commission, to rectify the harm from the crime. See e.g., Texas Disciplinary Rule
1.05. Neither of these facts is present here. The alleged sex with an underage teen
at a church outing was not committed by Quantec LLC or any employee thereof.
Moreover, the disclosure of Quantec’s trade secrets will not prevent the crime
(allege to have occurred in 2007), nor ‘rectify’ the crime (which does not appear to
have been aided by Vogel, in any case).
IV. Vogel’s Selective Outrage
A. Vogel’s Promotion of Pornography
Vogel suggests management of the names might have some relevance to the
conduct of Dauben, but Vogel himself has happily managed the names, and has
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actively provided the public pornographic content at <childrapeporn.com>, etc. for
the past year.
6
B. Vogel’s Desire to ‘Help’ the Prosecution is Selective, he has not Sought
to Help the Pedophilia and Child Rape Prosecutions against the Plaintiff’s
Counsel, MacPete
At about the same time frame as Joey Dauben is accused of sex with a 15
year old teenager, the plaintiff’s attorney, MacPete has been accused and subject to
multiple criminal proceedings for pedophilia and rape of a six year old boy
. Yet,
Vogel has made no motion to provide the authorities with a list of domain names
closely supervised and effectively controlled by MacPete.
7
We would hope that
MacPete is not a pedophile and child rapist, just as we would hope that Dauben
would not have used the poor judgment to have sex with a 15 year old teenager.
6
Notably, Quantec LLC wants the <childrapeporn.com> site to link to sex addition treatment
centers and victim resource groups. However, the District Court below has effectively hijacked
the content provided at Quantec LLC’s websites. In countries such as Argentina the government
seizes media outlets and controls what information will be provided to the public. That should
not be occurring in the United States. Receivership is a remedy that is limited to conserving
property that is subject to some underlying remedy in equity sought in rem in that property. In
the instant proceedings, there is no underlying in rem claim pled against the property of Quantec
LLC. As a result, the District Court has effectively taken governmental control over the media
content of Quantec LLC’s internet assets.
For that past year Vogel has used the sites such as <childrapeporn.com> to actively promote
pornography. Vogel is perfectly entitled to support whatever political or cultural agendas he
chooses. However, that should not be done with the assets of Quantec LLC. Neither the
District Court nor its receivers should be making content choices over the information distributed
by Quantec LLC. Governmental takeover of private companies is unhealthy in a free society.
Vogel’s control of <childrapeporn.com> and choice to use the site to promote pornography is
certainly a legitimate private value choice of Vogel. However, the District Court and Vogel
should not dictate the cultural and political values of the information distributed to the
public by Quantec LLC. If Quantec LLC wants to promote treatment of sex addiction instead
of promoting pornography, that should be the choice of Quantec LLC, and not controlled by the
District Court and its receiver.
7
MacPete was counsel for the domain name enterprise before it ended with MacPete turning on
Baron and suing him on behalf of the plaintiff below (who it turns out is himself a convict with
multiple indictments for fraud/forgery/theft).
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But neither of these have anything to do with Quantec LLC’s confidential
domain name list, or with Jeffrey Baron. Vogel’s new found sense of civic duty
is notably selective— desiring to risk destruction of Quantec LLC, in order to
retaliate against Dauben.
V. Vogel’s Motion is a Manufactured Billing Exercise
A. Not Designed to Conserve the Receivership Assets
Vogel’s present motion is another example, in a long line of prior examples,
of a contrived motion based on a tenuous and constructed ‘need’ that was actively
sought out by Vogel in order to have something to present and generate more and
more billing. Nothing in Vogel’s motion is designed to conserve the assets of
the receivership estates.
B. Vogel’s Seeking to Use Quantec LLC for His Personal Purposes
Notably, Vogel has solicited all of the ‘claims’ against Baron. Vogel also
moved for Quantec LLC to be placed into receivership. Vogel and Gardere were
also involved with litigation against Dauben, and now Vogel is involved in the
prosecution of molestation charges against Dauben. Everything with this
receivership seems to turn on Vogel— Vogel was the special master, Vogel was
also the mediator in the mediation that had not yet started but for which the
District Court was led by Vogel in ex parte proceedings to believe that Baron
caused the mediation to fail (so that Vogel would be appointed receiver), Vogel
filed the receivership order, Vogel moved for multiple parties to be added into his
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hands as receiver, including Quantec LLC. Now, Vogel is offended by an article
about him, and now finds a ‘civic duty’ to risk the value of Quantec LLC’s assets.
There is no logical relationship between managing 700,000 domain names (less
then one fourteen one-hundredths of one percent of which relate to sex) and the
poor judgment in allegedly having sex with a 15 year old at a church picnic.
Releasing the domain list of Quantec LLC involves great risk, is clearly against the
best interest of the company, and provides he company no benefit.
PRAYER
Wherefore, Quantec LLC prays that this Honorable Court reject and deny
Vogel’s motion.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
5400 LBJ Freeway, Suite 1200
Dallas, Texas 75240
(214) 210-5940 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
COUNSEL FOR APPELLANT
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CERTIFICATE OF SERVICE
This is to certify that this brief 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
COUNSEL FOR APPELLANT
Case: 10-11202 Document: 00511716469 Page: 16 Date Filed: 01/06/2012
