No. 10-11202

In the

United States Court of Appeals

for the Fifth Circuit

▬▬▬▬▬▬▬▬▬▬▬

NETSPHERE, INC. Et Al,

Plaintiffs

JEFFREY BARON,

Defendant-Appellant

ONDOVA LIMITED COMPANY,

Defendant-Appellee

▬▬▬▬▬▬▬▬▬▬▬

Appeal of Order Appointing Receiver in Settled Lawsuit

▬▬▬▬▬▬▬▬▬▬▬

----------------------------------------------------------------------------------------

Cons. w/ No. 11-10113

NETSPHERE INC., Et Al, Plaintiffs

JEFFREY BARON, Et Al, Defendants

QUANTEC L.L.C.; NOVO POINT L.L.C.,

Appellants

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 TO VOGEL EX PARTE MOTION

TO PREVENT FINANCING OPTIONS

▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬

Case: 10-11202 Document: 00511598195 Page: 1 Date Filed: 09/09/2011

TO THE HONORABLE FIFTH CIRCUIT COURT OF APPEALS:

COMES NOW Appellants, and subject to the preliminary Fifth Amendment

objection and motion previously filed in this cause, and subject to the responses

and motion previously filed with respect to Vogel’s motion to sell the assets of

Novo Point, LLC and Quantec, LLC, Appellants make this response to Vogel’s “ex

parte motion” 7/01/2011 SEALED MOTION for reconsideration of order

regarding financing Options.

I. ARGUMENT AND AUTHORITY

Vogel’s Motion is Clearly Not of an “Indifferent” Receiver as Required by Law

As a matter of well-established law, a receiver is an officer of the court

which appoints him and must be “an indifferent person between parties”. E.g.,

Booth v. Clark, 58 US 322, 331 (1855); Phelan v. Middle States Oil Corp., 154

F.2d 978, 991 (2d Cir.1946) (“A receiver ... owes a duty of strict impartiality, or

`undivided loyalty,' to all persons interested in the receivership estate, and must not

`dilute' that loyalty.”). From the prospective of an indifferent receiver, it should

not matter whether a party obtains a loan in order to have a receivership stayed or

dissolved. In simple language, it is none of the receiver’s business. Yet, Vogel has

invested an extraordinary amount of effort to prevent the dissolution or stay of the

instant receivership.

Case: 10-11202 Document: 00511598195 Page: 2 Date Filed: 09/09/2011

Vogel’s Arguments Are Not Credible

Vogel makes the absurd argument that secret, private sales

will generate

higher sales prices than a public auction. Vogel, however, can offer no explanation

as to why a purchaser who is willing to pay a set price in a private sale would not

pay that same price in a public auction. At a minimum, assets for which there is a

private bidder can be placed on auction with a reserve price equal to the private

sale price. Public auction is not some crazy idea thought up by Appellants’ counsel.

Rather, public auction is the Congressionally mandated and long accepted means

of selling property by court decree. Pursuant to 28 U.S.C. §2004, the requirements

of 28 U.S.C. §2001 (including the requirement of sale though public auction),

apply to personality.

Vogel makes the similarly absurd argument that the Appellants would seek

to minimize the return of the liquidation of receivership assets in order to ‘prevent’

“claimants” from being paid. Vogel’s argument makes no sense. Since the assets

of Novo Point, LLC, and Quantec, LLC, if sold at reasonable value, have been

valued by the receiver’s own reports at around $80 Million, it would make no

sense to liquidate all of the assets to pay $600,000.00 in contested claims.

Similarly, it makes no sense to liquidate $30 Million in unique domain assets for 3

Vogel has not disclosed his relationship to the proposed purchasers, or the relationship between

his law firm and its clients to the proposed secret purchasers.

Notably, Vogel’s “professional”, Mr. Nelson, set up a procedure to sell domains through

auctions that included specific marketing and advertising of the domains before holding the

auction. Vogel has had months to engage in such marketing, but has refused, insisting that the

assets should be sold to his personally selected buyers in secret, private sales.

Case: 10-11202 Document: 00511598195 Page: 3 Date Filed: 09/09/2011

cents on the dollar to ‘friendly’ purchasers, as Appellants strongly suspect Vogel

desires to do. Notably, although the District Court ORDERED Vogel to do so, he

refused to disclose the names of the domains he desires to sell, the amounts, or the

identity of the purchasers. (See page 1 of Vogel’s motion). Vogel clearly does not

want this information uncovered, nor does Vogel want to allow the Appellants to

secure alternative purchasers, nor to allow the Appellants avoid liquidation of the

assets by posting bond. Vogel raises all sorts of accusations against Appellants’

counsel, and makes all sorts of unsupported claims and allegations. Still Vogel

cannot explain why the Appellants would prefer the liquidation of $80 Million in

assets to pay $600,000.00 in alleged claims. More naturally, if assets are to be

liquidated, a single asset worth $1 Million should be sold for $1 Million, instead of

30 assets worth $30 Million being sold for $1 Million to insiders in private, secret

sales.

WHEREFORE, Vogel’s motion should be in all things denied and overruled.

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 APPELLANTS

Case: 10-11202 Document: 00511598195 Page: 4 Date Filed: 09/09/2011

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

Case: 10-11202 Document: 00511598195 Page: 5 Date Filed: 09/09/2011