Case: 1:03-cv-03904 Document #: 816 Filed: 01/28/14 Page 1 of 7 PageID #:14805

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS _____________________________________________ ) FEDERAL TRADE COMMISSION, ) ) Case No.: 03 - CV - 3904 Plaintiff, ) ) - against ) Hon. Robert W. Gettleman ) KEVIN TRUDEAU, ) ) Defendant. ) INTERVENORS OPPOSITION TO ____________________________________________ ) RECEIVORS IMPROPER SUR) REPLY PERRY KIRALY, ) ) Intervenors, ) ) - against ) ) ROBB EVANS & ASSOCIATES, LLC, ) ) Receiver ) Of Global Information Network, FDN. ) ____________________________________________ )

I. INTRODUCTION It is Intervenors position that the Receivers Sur-reply is out of rule and should be stricken. However, in the event that the Court accepts the Receivers out of rule Sur-reply, Intervenors ask the Court to accept and consider this Rebuttal to the facts and arguments raised in the Receivers Sur-reply II. POINTS AND AUTHORITIES The first observation to be made is that the Receivers Sur-reply does not dispute the legal arguments that Intervenors presented to the Court supporting their right to intervene in this action. The second is that the Receiver has presented extrinsically factual arguments that

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actually compel the need for this Court to grant the Intervenors Motion to Intervene. Receiver apparently seeks to disregard the well settled principle of law that when a party opposes a motion to intervene, the Court must accept as true all material allegations of the complaint of the intervening party, and must construe the complaint in favor of the intervening party. Warth v. Seldin, (1975) 422 U.S. 490, 501; United States v. Metro. St. Louis Sewer Dist., 569 F.3d 829, 834 (8th Cir. 2009) Instead of presenting legal arguments supporting his position that Intervenors have no legal right to complain about the actions of the Receiver, he presents untested, unverified, and contested factual arguments in an effort to justify the actions that the Receiver has taken and about which the Intervenors are complaining. Receiver did not present any legal counter to contradict the requirements that Rule 24(c) requires only that an intervening party submit a pleading that sets out the claim or defense for which intervention is sought and that affidavits and other extraneous evidence are improper to support or contest the validity of Intervenors claims. Courts have routinely rejected the use of extrinsic evidence at this stage of the pleadings. United States v. Metro. St. Louis Sewer Dist., 569 F.3d at p. 834. See, also Lujan v. Defenders of Wildlife, (1992) 504 U.S. 555, 561; and Fund for Animals, Inc. v. Norton, 322 F.3d 728, n. 4 (D.C. Cir. 2003). Receiver asserts that since each member of the Club signed a document acknowledging that he or she had no individual rights of ownership in the GIN Fdn or its assets, that the members as a whole have no ownership rights. Well established law has rejected that logic. The Intervenors are not claiming that they as individuals have the right to own GIN or its assets. Instead, Intervenors argue that GIN Fdn is an unincorporated association and that the authorities cited in Intervenors Reply support the proposition that the membership as a whole owns those

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rights. The general rule, unrefuted in the Sur-reply is that the active members of a voluntary nonbusiness association are the owners of its properties and hold such assets in trust for the community interest of the unincorporated society or association. See, Murray v. Sevier, 156 F.R.D. 235 (D. Kan. 1994); Martinek v. Zarovy, 318 Ill. App. 605 (Ill. App. Ct. 1943); Hope of Alabama Lodge of Odd Fellows v. Chambless, 212 Ala. 444, 446 (Ala. 1925); State v. Sunbeam Rebekah Lodge, 169 Ore. 253 (Or. 1942); United Brotherhood of Carpenter & Joiners v. Stephens Broadcasting Co., 214 La. 928, 937-938 (La. 1949). The Receiver has not presented any legal authority refuting the Intervenors right to bring this action for the benefit of all the members or for the benefit of the Club. Receivers Sur-reply simply launches into a factually laced argument in full defense of his actions that Intervenors are criticizing.1 Seemingly, the Receiver believes that if he makes a claim to this Court, albeit one untested by the discovery process, that the Court will automatically accept his actions as proper and his motives as pure. He seeks to deprive the Court of an opportunity to review Receivers actions without giving the Intervenors the legitimate prospect of presenting an opposing responsible view. The Receivers proposed Sur-reply is a desperate attempt to prevent the Intervenors an opportunity to legitimately scrutinize the Receivers actions and motives, and thereby the chance to protect their interests. As for whether the Intervenors and the other members have suffered or will suffer any actionable harm, the Receivers proposed Sur-reply fails to explain the cataclysmic loss of membership in the Club that has already occurred since he took over and began to reshape the Club in his image and likeness.2 Neither does the Receiver defend his desire to end the Club as the Members knew it and to sell off its assets. Rather, he suggests that his actions and motives
1

The extrinsic facts relied upon by the Receiver are alleged to be true, but as of yet, they have not undergone any scrutiny that would establish their reliability, and the Intervenors contest their credibility. 2 It is believed that over 5,000 members have dropped their membership since the Receiver took control.

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for doing so are unassailable. Though his Sur-reply tries to soften the tone of his intentions, he confirms his intention to end the Club as the Members knew it and sell of its assets. In his brief, he states: Rather than intending to shut down the club and liquidate its assets as the Proposed Intervenors state, the Receiver explained to GINs members that it is the intention of the Receiver to get permission from the Court to transfer GINs operations for a fair price to a new owner or ownership group. (Id.) Later in the same announcement, the Receiver reiterated: As a reminder, the Receiver is here for the purpose of stabilizing the organization, providing guidance so that it can be operated legally and become financially stable with the end goal being to transfer GIN operations for a fair price and end our oversight. The Receiver further admits in his brief that The Receiver anticipates being in a position to entertain expressions of interest in purchasing GIN within the next few weeks. Who will be the new ownership of this Club that the Members will be stuck with? Who will get the proceeds from the sale of the Clubs assets? There are many ways to say shut down the Club and liquidate its assets, and the above quotes from the Receivers Sur-reply are just three different ways of saying it. Though the Receiver asserts that he would get the Courts permission before selling off the assets of the club, reading between the lines of Receivers brief, what he is really saying is that he will seek the Courts permission to shut down the Club and sell off its assets, and that he would prefer to do it without any scrutiny from the Club Members. As Mr. Justice Brandeis was quoted as saying, Sunlight is the best disinfectant. The meaning of this epigram is clear. People who feel uncomfortable under the bright light of scrutiny and criticism often have something to hide. The Receiver simply does not want his conduct to be examined Once more, resorting to unsubstantiated and untested factual arguments, the Receiver claims he only cancelled one event; to-wit, a Club sponsored cruise, and he gives his reason for doing so. Again this is an argument the Receiver expects the Court to take at face value. The

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truth is that he not only cancelled this event, but he has also failed to schedule events that usually would have taken place, for example an event known as the Dream Weekend. Many other regional events would have been scheduled and held, had he not interfered. If the Receiver were acting in the best interests of the Club and its Members, scores of other events, sponsored by GIN, would normally have been held throughout the United States and in other countries. The Receiver seemingly has adopted the stratagem that he does not have to cancel an event if he does not schedule or promote it. The Receivers brief contains a table of events that he claims did take place. The truth about the events depicted in the table in Receivers brief is that these events were put on locally by individual members without the assistance, financial or otherwise, from the Receiver or this newly identified group called The Hybrid Group, about whom nobody seems to know anything.3 These local meetings were primarily put on by local members to gain information from other members that they were not getting from the Receiver regarding the fate of their Club. Yet, the Receiver again expects the Court to accept this unsupported factual contention at face value without giving Intervenors and the other Members a chance to expose this claim to a little sunlight. Receivers Sur-reply candidly admits that he censored the Clubs website, but only items and information that he decided were illegal or unlawful. Well, who established that to be true? Is the Court, once again, required to simply accept as true what the Receiver declares, solely

The events may have been advertised on GINs website, but this was done by the Members putting on the events to let other Members of where and when.

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because he is the one making the statement? Receiver did not address the fact that he has cutoff access to Club information to Members that have disagreed with his position.4 Receivers Counsel admits that he informed Intervenors Counsel that those Members that followed Perry Kiralys advice to stop paying their dues while the Receiver remained in control would be subject to a lawsuit by the Receiver for conspiracy to commit tortious interference, but denies that he went so far as to threaten such litigation. Counsel for Intervenors stands by his declaration, and further submits his opinion that the only reason that the Receiver has not carried through with this threat is that he realized that such an action would expose the Receivers actions to the scrutiny he is so desperately seeking to avoid. III. CONCLUSION Intervenors have presented strong and unrefuted legal arguments supporting their right to intervene in this action on behalf of all Members and the Club. Instead of refuting Intervenors established legal principles, the Receiver has submitted a Sur-reply that effectively argues that the Court should disregard the legal principles the Intervenors assert and not allow the Intervenors the right to protect their interests or to scrutinize the Receivers actions because that would be inconvenient. In that sense, the Receiver is correct. It is always easier to trample on a persons rights when that person is not allowed in the ring to defend him or herself. Obviously, it is the Receivers preference that he should be permitted to operate under the cover of darkness rather than in the cold light of day. sunshine. Intervenors respectfully ask the Court to let in the

Perry Kiralys access to information on the GIN website has been blocked and his membership has been terminated for his participation in this litigation. Upon information, other members have also had their access to the website restricted for voicing negative views about the Receivers actions.

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Respectfully Submitted,

_________________________________ Timothy A. Shimko (Ohio SBN 0006736) Daniel Stephen Shimko (NY SBN 4724464) Timothy A. Shimko & Assocs. Co., L.P.A. 1010 Ohio Savings Plaza 1801 E. 9th St. Cleveland, Ohio 44114 Tel. (216) 241-8300 Fax (216) 241-2702 tas@shimkolaw.com

CERTIFICATE OF SERVICE I, Timothy A. Shimko, an attorney, hereby certify that, on the 28th day of January, 2014, I caused a true and correct copy of the foregoing Intervenors Opposition to Receivers Improper Sur-reply to be served through the Courts Electronic Case Filing System on the following: Kimball Richard Anderson kanderson@winston.com Thomas Lee Kirsch, II tkirsch@winston.com Katherine E. Rohlf kcroswell@winston.com Michael Mora mmora@ftc.gov Jonathan Cohen Jcohen2@ftc.gov Amanda B. Kostner akostner@ftc.gov David OToole dotoole@ftc.gov Blair R. Zanzig bzanzig@hwzlaw.com ________________________ Timothy Shimko

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