response to Vogel’s request to sell stocks

No. 10-11202
In the
United States Court of Appeals
for the Fifth Circuit
▬▬▬▬▬▬▬▬▬▬▬
NETSPHERE, INC. Et Al, 
Plaintiffs
v.
JEFFREY BARON, 
Defendant-Appellant
v.
ONDOVA LIMITED COMPANY, 
Defendant-Appellee
▬▬▬▬▬▬▬▬▬▬▬
Appeal of Order Appointing Receiver in Settled Lawsuit
▬▬▬▬▬▬▬▬▬▬▬
----------------------------------------------------------------------------------------
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
▬▬▬▬▬▬▬▬▬▬▬
Appeal of Order Adding Non-Parties Novo Point, LLC 
and Quantec, LLC as Receivership Parties
▬▬▬▬▬▬▬▬▬▬▬
From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
RESPONSE AND MOTION FOR RELIEF WITH RESPECT TO 
VOGEL MOTION TO LIQUIDATE JEFF BARON’S STOCKS 
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
Case: 11-10113     Document: 00511598161     Page: 1     Date Filed: 09/09/2011

-
1
-
TO THE HONORABLE FIFTH CIRCUIT COURT OF APPEALS:
COMES  NOW  JEFFREY  BARON,  Appellant,  and  subject  to  the 
preliminary Fifth Amendment objection and motion previously filed in this cause, 
make this response, objection and motion for relief with respect to Vogel’s motions 
to liquidate  Jeff Baron’s stocks.
1
  Vogel’s motion to liquidate Baron’s IRAs was 
denied by the District Court and has been withdrawn by Vogel, and this response 
addresses Vogel’s motion to liquidate Baron’s stocks.
I. ARGUMENT AND AUTHORITY 
There Are No In Rem Claims Against Jeff Baron’s Property
Contrary  to  the  underlying  basis  of  Vogel’s  motion,  there  are  no  in  rem
claims against Jeff Baron’s property being held in receivership.  As a preliminary 
matter, an unsecured creditor has, in the absence of statute, no substantive right, 
legal or equitable, in or to the property of his alleged debtor. This is true, whatever 
the nature of the property.  The only substantive right of a simple contract creditor 
is to have his debt paid in due course. His adjective right is, ordinarily, at law. He 
has  no  right  whatsoever  in  equity  until  he  has  exhausted  his  legal  remedy.  
Accordingly,  a  court  does  not  have  equitable  jurisdiction  to  use  receivership  to 
enforce  unsecured  creditors’  in  personam  claims  (against  the  owner  of  the 
1
 The three motions involved are (1) 07/05/2011 MOTION filed by Appellee Mr. Peter S. Vogel 
of The Receiver's Omnibus Motion to Permit Cashing Out of Stocks and IRAs (Pending Before 
the District Court and Filed with the Fifth Circuit Pursuant to District Court Order) [6850979-2]; 
(2)  07/05/2011  MOTION  filed  by  Appellee  Mr.  Peter  S.  Vogel  Withdrawing  the  preceding 
Motion [6850979-2]; and (3) 7-07-11 Motion to permit liquidation of non-exempt stocks-but not 
the liquidation of the IRA's.
Case: 11-10113     Document: 00511598161     Page: 2     Date Filed: 09/09/2011

-
2
-
receivership property) before those claims have been reduced to judgment. Pusey 
& Jones Co. v. Hanssen, 261 U.S. 491, 497 (1923); e.g., Williams Holding Co. v. 
Pennell, 86 F.2d 230 (5th Cir. 1936).  
Vogel is ignoring a fundamental principle of law— the distinction between 
equitable in rem claims against receivership property and in personam claims at 
law  against  the  owner  of  the  receivership  property  individually.  Receivership 
actions are in rem actions over specific property. E.g. Sumrall v. Moody, 620 F.2d 
548,  550  (5th  Cir.  1980).    In  personam  actions  to  establish  liability  on  claims 
against  individuals  do  not  involve  the  receivership  res.  Hawthorne  Savings  v. 
Reliance  Ins.  Co.,  421  F.3d  835,  855  (9th  Cir.  2005)  (noting  the  fundamental 
distinction between “the liquidation of a claim and the enforcement of the claim 
after it  has  been reduced to judgment”).  After an in  personam action  has been 
liquidated and reduced to judgment, an attempt to execute the judgment against 
property is then normally in rem (and, thus, an attempt to execute on a judgment 
would seek an interest in the receivership res). Id.  Accordingly, only an attempt to 
levy against the res made after a judgment has been obtained in personam is an in 
rem action that relates to a court's dominion over the receivership res.  Id.  Vogel is 
attempting to create  an interest  in property that  does  not exist.  The ‘claimants’ 
against Baron have not asserted any legally cognizable in rem claims against the 
res property– rather, the claimants allege that Mr. Baron personally is obligated in 
personam  to  pay  them  money  for  breach  of  contract.  The  crucial  step  of 
adjudication of in personam liability against Baron has not occurred.  The District 
Case: 11-10113     Document: 00511598161     Page: 3     Date Filed: 09/09/2011

-
3
-
Court’s order to pay ‘claimants’ against Baron has been appealed and the District 
Court has been stayed from further proceedings.  Notably, a fundamental step of 
adjudicating  in  personam  liability  is  a  constitutionally  protected  step  and,  with 
claims at law, invokes a citizen's right to trial by jury.  E.g., Ross v. Bernhard, 396 
U.S. 531, 531 (1970).  Accordingly,  it is premature to seek to liquidate Baron’s 
stocks.  The matter is currently on appeal and there are no in rem claims to the 
receivership res, only unliquidated in personam ‘claims’ against Baron.  Notably, 
the  District  Court  lacks  subject  matter  jurisdiction  over  those  non-diverse  in 
personam state law claims against Baron personally. 
Irreparable Injury and Costs
Vogel’s motion fails to apprise the Court of the irreparable injury and costs 
involved  with  the  liquidation  of  the  stocks.    As  a  primary  matter  there  is  a 
substantial tax liability which will be incurred with the stock’s sale.   Additionally, 
because the stock market is extremely depressed in value at this time,  there is a 
very  real likelihood that should the Court at a later time determine that  Baron’s 
assets should not have been liquidated to pay the alleged ‘claims’ solicited against 
Baron by Vogel,  it will not be possible to restore ownership of the stocks currently 
held because their market value will have vastly appreciated.  
Equitable Considerations
As a matter of equity, the Court should examine, at least on a prima facie
Case: 11-10113     Document: 00511598161     Page: 4     Date Filed: 09/09/2011

-
4
-
basis the  underlying  ‘claims’  for which the stock sale  is sought.
2
  These  claims 
have not been tried before any court, the claims were solicited by Vogel and were 
presented  to  the  District  Court  below  in  a  one-sided  ‘report’  that  intentionally 
excluded all of the exculpatory evidence. SR. v8 p1242-43;  SR. v7 p202.  
A Better Alternative
Jeff Baron  had  a  million  dollars  in  his  savings  accounts.    He  voluntarily 
turned over his banking information and material to the receiver immediately upon 
imposition of the receivership.  Still, the receiver emptied Baron’s savings accounts 
in 'fees'. It is not comprehensible how reasonable costs of protecting a handful of 
bank accounts and IRAs (that were voluntarily turned over to the receiver) could 
reach a million dollars, emptying the bank accounts where were ordered conserved 
by the receivership order.  In any case, the only remaining assets of Jeff Baron in 
receivership are his exempt IRAs
3
 and the stocks receiver now seeks to liquidate.  
If the  receivership as to Jeff  Baron’s  property  is  now dissolved or  stayed
pending appeal, Baron can borrow and pay into the receivership cash in the amount 
of  the  liquidation  value  of  the  stocks.      There  is  no  reason  to  keep  Baron  in 
2
 A compelling prima facie case is established in the record that the ‘claims’ solicited by Vogel 
against Baron are absolutely groundless. SR. v8 p 1197-1201, 1212- 1243.  For example, Doc 
522 should be examined. SR. v6 p64.  The issues presented in that filing are issues of law based 
upon  the  “claimant’s”  own  evidence  and  statements  and  establish  that  the  ‘claim’  is  clearly 
groundless,  even  frivolous.    The  District  Court’s  response  to  being  presented  with  the  clear 
argument establishing the groundless of the claim was to seal the revelation as if it were some 
state secret. SR. v6 p64 (sealing Doc 522).   
3
 Pursuant to Texas Law, the Roth IRA accounts are  exempt  from execution. Tex.Prop.Code 
§42.0021; E.g., In re Youngblood, 29 F.3d 225 (5th Cir. 1994).  The IRAs were not property 
subject to seizure by the receiver as it is a longstanding principle of law that a receiver may take 
into his possession only “property which may be taken in execution”. Booth v. Clark, 58 U.S. 
322, 331 (1855). 
Case: 11-10113     Document: 00511598161     Page: 5     Date Filed: 09/09/2011

-
5
-
receivership—  his  savings  accounts  have  been  fully  emptied  by  the  receiver.  
Allowing Baron to provide a bond in order to be released from the receivership 
works  no  hardship  to  any  party,  eliminates  the  necessity  to  liquidate  the  stocks 
(should  such a  necessity  exist),  and  prevents  further  irreparable  injury.    Such  a 
remedy  also  eliminates  the  continuing  costs  of  receivership  as  to  Jeff  Baron's 
property.   Further, there is no reason Baron should not be allowed to work and 
engage  in  business  transactions  as  he  is  currently  prohibited  from  doing  by  the 
receivership order.
II. CONCLUSION & PRAYER
There are  no in  rem claims asserted against Jeff  Baron’s  property  held  in 
receivership,  and  there  is  accordingly  no  basis  in  law  to  liquidate  his  stocks.  
Liquidation  of  the  stocks  involves  costs  including  taxes  and  substantial  risk  of 
irreparable injury.  The stocks should not be sold until the appeal of the District 
underlying issue of the denial of Jeff Baron’s right to paid counsel and jury trial (or 
any trial) to defend the in personam ‘claims’ asserted against him is resolved. 
 Jointly, and in the alternative, Jeff Baron prays that the receivership as to 
him personally be dissolved or stayed pending appeal and that he be allowed to 
post bond in the amount of the stocks sought to be liquidated in return for release 
of the stocks and his exempt property from the receivership, and the restoration of 
his right to enter business transactions, work, and earn wages.
Case: 11-10113     Document: 00511598161     Page: 6     Date Filed: 09/09/2011

-
6
-
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
CERTIFICATE OF SERVICE
This is to certify that this motion 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
CERTIFICATE OF CONFERENCE
Counsel for the Vogel and Sherman oppose. 
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT
Case: 11-10113     Document: 00511598161     Page: 7     Date Filed: 09/09/2011