Blix V YMC App # 87 - 12-35986 - YCLT Reply Re Osc W Exhibits

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Case: 12-35986, 04/17/2014, ID: 9062168, DktEntry: 87-1, Page 1 of 15
Case No. 12-35986
IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT
TIMOTHY L. BLIXSETH
Appellant,
v.
YELLOWSTONE MOUNTAIN CLUB, LLC, et al.
Appellees,
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF MONTANA, BUTTE DIVISION, CASE No. 2: l 1-cv-00073-BU-SEH
HONORABLE SAME. HADDON, DISTRICT JUDGE, PRESIDING
YCLT'S RESPONSE TO SHOW CAUSE SUBMISSIONS FILED BY

MICHAEL J. FLYNN, TIMOTHY L. BLIXSETH, CHRISTOPHER J.
CONANT, MICHAEL J. FERRIGNO AND PHILIP STILLMAN
Charles W. Hingle (1947)
Shane P. Coleman (3417)
HOLLAND & HART LLP
401North31st Street, Suite 1500
P.O. Box 639
Billings, Montana 59103-0639
chingle@hollandhart.com
spcoleman@hollandhart.com
Phone:406-252-2166
Facsimile: 406-252-1669
Robert R. Bell
MULLIN HOARD & BROWN, LLP
Amarillo National Plaza Two, Suite 800
500 South Taylor, Lobby Box #213
Amarillo, Texas 79101-2445
rbell@mhba.com
Phone: 806-372-5050
Facsimile: 806-372-5086
Attorneys for Yellowstone Club Liquidating Trust
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Yellowstone Club Liquidating Trust ("YCL T") files this Response to

Michael J. Flynn's Response to Order to Show Cause (Doc. No. 78-1)
("Flynn Response"), Timothy L. Blixseth's Response to Proposed Sanctions
(Doc. No. 84) ("Blixseth Response"); Christopher J. Conant's Response to
the Court's Order to Show Cause (Doc. No. 77) ("Conant Response");
Michael J. Ferrigno's Response to the Court's Order to Show Cause (Doc.
No. 76) ("Ferrigno Response"); and Philip Stillman's Amended Response to
the Court's Order to Show Cause and Request For a Hearing Pursuant to
Local Rule 46(c) (Doc. No. 86) ("Stillman Response").
I. INTRODUCTION
As this Court is aware this action arises out of the efforts of Timothy
Blixseth ("Blixseth") and his counsel, including Michael J. Flynn ("Flynn"),
Christopher J. Conant ("Conant"), Michael J. Ferrigno ("Ferrigno") and
Philip Stillman ("Stillman"), to have United States Bankruptcy Judge Ralph
Kirscher disqualified from Yellowstone Club bankruptcy cases pending in
the District of Montana. Blixseth first moved to disqualify Judge Kirscher in
2010, alleging that he was part of some mythical "grand conspiracy."
Predictably, these accusations have not been made against Judge Kirscher
alone. Among those Blixseth has accused of conspiring or being biased
against him are federal judges and law clerks, attorneys and law firms
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involved in the Yellowstone Club cases, and political figures and

institutions, including the Governor of Montana.
(Exh. A at pp. 3-9)
Blixseth's grand conspiracy theory even reaches to Washington, D.C.,

where, in a recent letter, Blixseth added Attorney General Eric Holder and
his Deputy, Lanny Breuer, to the ever-growing list of individuals allegedly
out to get him. (Exh. B ).
None of these accusations have ever been found to have merit. Indeed,
as it relates to Judge Kirscher, on February 18, 2014 this Court determined
that "Blixseth's claims are a transparent attempt to wriggle out of an
unfavorable decision by smearing the reputation of the judge who made it.
The bankruptcy court was correct in denying the recusal motion, as was the
district court in affirming."
(Doc. No. 68-1 at p. 12). Additionally, on
February 18, 2014 this Court ordered Blixseth and his counsel to show cause
why they should not be sanctioned for filing this frivolous appeal. (Doc. No.
69). All counsel and Blixseth complied with the Court's Order.
II. SUMMARY OF ARGUMENT

Neither Blixseth nor Flynn show any remorse for their conduct.
Instead, they both continue to argue that this Court simply got it wrong and,
in fact, indicate that the Ninth Circuit has joined the vast conspiracy to
persecute Blixseth. More disturbing, however, is their continued citation to
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"evidence" that they know to be of highly questionable credibility. This

issue was fully briefed before this Court in connection with Blixseth's
request for an emergency stay of proceedings before Judge Kirscher. (Doc.
No. 52). In the Emergency Stay Motion Blixseth and his counsel (including
Flynn, Conant, Ferrigno and Stillman) submitted this same questionable
evidence for this Court's consideration. Id. YCLT responded and pointed
out in detail that the evidence relied upon was not reliable. (Doc. No. 55).
This Court denied Blixseth's request for stay. (Doc. No. 57).
As will be shown below, and has been shown previously to this Court,
there are serious issues with respect to the authenticity of the "evidence"
allegedly obtained from the computer of Blixseth's ex-wife. (Doc. No. 55).
Yet, Flynn and Blixseth fail to inform this Court that there are serious issues
that have been raised as to authenticity of these documents. Flynn also relies
on "evidence" from the internet. As YCLT has already pointed out to this
Court, a cursory review of that internet information demonstrates that the
information is unreliable.
Finally, while Conant has not cited this "evidence" in the Conant
Response, he has otherwise cited some of this "evidence" in a letter to this
Court, allegedly in support of a complaint of judicial misconduct against
Judge Kirscher.
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See Michael J. Flynn Declaration (Doc. No. 78-2) at
(5 of 387)
Exhibit 5.
Ferrigno and Stillman appeared as counsel for Blixseth and
signed the Emergency Stay Motion. (Doc. No. 52).
III. ARGUMENT
Flynn and Blixseth continue to rely on "evidence" they ought to have
reason to believe (1) has been altered; and (2) is demonstrably unreliable.
A.
Documents allegedly retrieved from his ex-wife's computer
Flynn and Blixseth refer to two documents that were allegedly

obtained from the computer of his ex-wife, Edra Blixseth ("Edra").
Specifically, there are two memos that are attached as Exhibits 2 and 3 to the
Flynn Declaration. (Doc. No. 78-2).
Flynn and Blixseth refer to this "evidence" as "authenticated" or
"admissions" by Edra.
(Doc. No. 84 at 4; Doc. No. 78-1 at 4).
Significantly, however, Flynn and Blixseth fail to tell the Court that there are
serious questions about the authenticity of this "evidence." Such failure is
simply bewildering because Flynn, Blixseth, and Blixseth's other counsel
are fully aware of the serious authenticity issues with this "evidence." See
In re Coquico, Inc., Case No. 13-16049 (Banla. E.D. Pa. April 2, 2014)
(imposing sanctions against counsel for "later advocation a position after
learning that the position no longer has merit.") (internal quotation
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omitted). 1 Specifically, not only was this issue previously briefed before this
very Court, but this issue was brought to Blixseth's and his counsels'
attention in connection with a recent challenge to the property settlement
("Marital Settlement Agreement") in the divorce proceedings between
Blixseth and Edra.
In that proceeding, Blixseth brought a Motion for
Sanctions and proffered these same exhibits in partial support of that relief.
In response to that Motion for Sanctions, Edra and her counsel filed
affidavits and supporting documents that conclusively demonstrate that the
"evidence" is forged.
(Exh. C).
On January 31, 2013, the Motion for
Sanctions in the divorce court was "taken off calendar without prejudice."
(Exh. D).
Blixseth apparently re-filed the motion, but the divorce court
denied the motion by minute order on February 20, 2014. (Exh. P).
Exhibit 3 to the Flynn Declaration (Doc. No. 78-2) is allegedly an
eight-page memo from Edra to her lawyer regarding the Marital Settlement
Agreement (the "MSA memo"). In that memo, Flynn and Blixseth point to
the following statements as evidence of Judge Kirscher's alleged bias and
corruption: "Remember we have added help there from the BK Judge who
loves us, and hates Tim and Mike Flynn. At this point they could not get a
Despite being on notice that these exhibits were false, Flynn includes them
as Exhibits 2 and 3 in the declaration attached to the Flynn Response (the
"Flynn Declaration".)
1
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decent ruling in their favor from the Judge if they tried. Either way SB and
BS have things in place in that courtroom to help us. We need to make sure
the validity of the MSA never ends up being decided by Judge Waters. That
would be a nightmare for all of us." In the Response to the Motion for
Sanctions, however, compelling evidence was presented that this portion of
the document has been altered, is fraudulent and a forgery. (Exh. C).
Specifically, Edra's lawyer provides a September 20, 2009 e-mail
from Edra wherein she attaches the original MSA memo. (Exh. C). The
original MSA memo at first glance appears identical to the exhibit submitted
and relied on by Flynn and Blixseth. Closer examination reveals, however,
that the MSA memo provided by Edra to her lawyer does not contain the
statement set forth above. (Id.) Additionally, Edra's lawyer at the time the
original memo was drafted, asked Edra to cut and paste the MSA memo into
an e-mail so that he could read it on his Blackberry. (Id.) Significantly, that
contemporaneous copy of the memo in the Blackberry e-mail (which is also
attached to the affidavit) does not contain the statement set forth above. (Id.)
Simply stated, it is abundantly clear that the evidence submitted to this Court
is not authentic and has indeed been altered.
Nevertheless, Flynn and
Blixseth never mention even the hint of a problem with authenticity and, in
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fact, refer to this "evidence" as "authenticated" (Doc. No. 84 at 4) or

"admissions" by Edra (Doc. No. 78-1 at 4).
The allegations that the document has been authenticated or is an
admission are based on Edra's December 2012 deposition wherein she
allegedly authenticated the altered MSA memo.
misrepresentation of the record.
This is an outright
The deposition transcript in this regard
consists mainly of sparring between lawyers as to whether the document can

even be used. (Exh. E). In her deposition Edra was shown the seven-page
altered MSA Memo that, as shown, at first glance has the appearance of
being identical to the original MSA memo. The statement upon which Flynn
and Blixseth rely (and which was added) appears on the last page of the
seven page document. What is abundantly clear, however, is that Edra did
not authenticate the alleged statements in the document on which Flynn and
Blixseth place so much reliance.
With respect to Exhibit 3 to the Flynn Declaration (Doc. No. 78-2)
(the "MSA Bullet Points Memo"), Flynn and Blixseth again point to alleged
statements reflecting some type of a belief that Judge Kirscher has been
improperly influenced. According to Edra, the MSA Bullet Points Memo is
"completely manufactured. I didn't type it and I have never seen it before."
(Exh. C).
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Making matters even worse, Flynn and Blixseth allegedly received,

and rely in the entirety on, this information from Dennis Montgomery, a
former business partner of Edra.
(Exh. F).
As such, the credibility of
Montgomery is critical to the resolution of this matter. However, according

to one litigant who brought suit against Montgomery to block his discharge
in bankruptcy, Montgomery has a pattern of "lying under oath." (Exh. G at
pp. 5-6). Further, according to this litigant, "Montgomery's modus operandi
is to conceal documents and money." (Id.). This litigant is none other than
Michael Flynn. Flynn is represented in that action by Conant. (Exh. H).
In the Montgomery bankruptcy case, Flynn alleged that Montgomery
defrauded the United States government. To that end, Montgomery asserted
his Fifth Amendment rights over 200 times in the deposition that was taken
in that case by Conant on Flynn's behalf. (Exh. I). In this same deposition,
Flynn accused Montgomery of being a "computer hacker" and a "fraud."
(Exh. I at p. 231).
The above-referenced lawsuit stems from a sanction award Flynn
received from the United States District Court in Nevada against
Montgomery. In that action, the court concluded that "Mr. Montgomery's
September 2007 declaration contained untrue statements, which he knew
were untrue."
(Exh. J at p. 1). The court further ordered that a copy of its
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order was to be sent to the Office of the United States Attorney. (Exh. J at p.
53).
Despite the foregoing history, Flynn and Blixseth now submit to this
Court computer related "evidence" that was allegedly obtained from the
same Dennis Montgomery who in Flynn's own words, is a "fraud" has a
pattern of "lying under oath" and is a "computer hacker." Apparently, when
Montgomery is providing "evidence" that is allegedly helpful to their cause,
his past pattern of "lying under oath" is of no concern. YCL T submits that
for this reason alone this Court is entitled to, and should, disregard entirely
everything provided by Montgomery, who, according to a United States
District Judge and Flynn, is a liar.
B. Judge Kirscher's alleged relationship with his former law firm.
Flynn continues to assert that Judge Kirscher maintains some type of

relationship with his former law firm, Worden Thane, P .C., which he left in
1999 when he took the bench. What is the smoking gun that proves these
which we all know is never wrong.
serious allegations? The internet -
Flynn maintains that there is "documentary evidence" of Judge Kirscher's

private e-mail accounts with his former law firm. (Doc. No. 78-1 at
if 3).
This allegation was previously made in the Emergency Motion to Stay and
was based on information obtained from intelius.com.
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According to
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intelius.com the email address of rkirscher@wthlaw.net is currently

associated with Judge Kirscher. However, when one goes to that website
there is a section above the email address that is entitled "What is an Email
Lookup?" and states that it contains current and historical information.
(Exh. K). No one denies that Judge Kirscher once had an email address at
Worden Thane, since he once worked there. Blixseth and Flynn failed to
present any evidence that Judge Kirscher has a Worden Thane address now
relying instead on innuendo related to the Judge's prior association with that
firm. The information from the intelius website, however, in no way proves
Judge Kirscher has a current email address there. In fact, attached hereto is
an email that counsel for YCLT received from one of Worden Thane's
partners, Ronald Bender. (Exh. L). This email shows that Worden Thane
has adopted a new e-mail address (wordenthane.com as opposed to
wthlaw.net).
More
specifically,
Mr.
Bender's
email
address
1s
rbender@wordenthane.com, not rbender@wthlaw.net. (Exh. L).

Finally, Flynn's citation to an article in the Sacramento Bee is typical.
(Doc. No. 78-1 at p. 5). It is readily apparent from a reading of the article
that the source for the information concerning Judge Kirscher is Blixseth or
one of his legion of lawyers. In other words, scandalous information is fed
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to the media and then the article from media outlet is cited as support for the
information provided.
IV. CONCLUSION
When provided with an opportunity to show why sanctions ought not
to be entered against them, Flynn and Blixseth submit evidence in support of
their response that is, at best, of highly questionable validity.
Their
responses are particularly astounding because they have been warned on at

least two occasions about the questionable validity of this evidence.
Nevertheless, they continue to attach this "evidence" to legal pleadings and
refer to the "evidence" as "authenticated" or "admissions" made by Edra.
Simply stated, the evidence is fraudulent and they know it.
Perhaps most telling is the action taken by Blixseth after his Motion to
Stay Proceedings was denied by this Court. Pending before the Bankruptcy
Court was a Rule 9024 Motion wherein Blixseth sought to have the
Judgment entered against him in AP-14 vacated based on the same
"evidence" he now submits to the Court.
(Exh. M). A hearing on this
Motion had been set for September 10, 2013; however, on September 5,
2013 Blixseth simply withdrew his Rule 9024 Motion after his stay motion
was denied by this Court.
(Exh. N).
In other words, when given his
opportunity to place this "evidence" before a court and subject it to rigorous
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cross-examination Blixseth raised the proverbial white flag. The bankruptcy

court vacated the hearing based on the withdrawal. (Exh. 0).
Equally telling is that some of the lawyers in this case have adopted
the arguments made by other lawyers in connection with this issue. (Doc.
No. 77 at p.l; Doc. No. 86 at p. 5). Notably no one has adopted any of the
arguments set forth in the Flynn Response or the Blixseth Response.
The responses of Flynn and Blixseth to this Court's Order to Show
Cause betray no remorse or any coherent explanation for their behavior.
They rely on questionable sources and material to promote the same
conspiracy theory rejected by this and other courts. Their responses should
be rejected as well.
DATED this 1ih day of April, 2014.
Isl Robert R. Bell

Robert R. Bell
Amarillo National Plaza Two, Suite
800
500 South Taylor, Lobby Box #213
rbell@mhba.com
ATTORNEYS FOR YCLT
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CERTIFICATE OF COMPLIANCE
Pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule 32-1, I

certify that the YCL T's Response to Show Cause Submissions filed by
Michael J. Flynn, Timothy L. Blixseth, Christopher J. Conant, Michael J.
Ferrigno and Philip Stillman is proportionally spaced in serif font (Times
New Roman), has a typeface of 14 points, and contains 2,509 words,
excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).
This response was prepared using Microsoft Word and the word count was
determined using the Microsoft Word word count application.
Dated: April 17, 2014
{5290/00/00853726.DOC I I}
Isl Robert R. Bell

Robert R. Bell
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CERTIFICATE OF SERVICE
I hereby certify that on the 17th of April, 2014, I have mailed the
foregoing document by First Class Mail, postage prepaid, or have dispatched
it to a third party commercial carrier for delivery within 3 calendar days to
the following counsel of record for Blixseth:
Christopher Conant
Conant Law LLC
730 17th Street, Suite 200
Denver, CO 80202
cconant@conantlawyers.com
Michael John Ferrigno

Law Office of Michael J Ferrigno
PLLC
Suite 486
1200 N. Main Street
Meridian, ID 83680
michael.ferrigno@ferrigno-law.com
Michael James Flynn Sr.

Michael J. Flynn
P.O. Box 690
6125 El Tordo
Rancho Santa Fe, CA 92067
mike@mjfesq.com
Patrick Fox
Doubek Pyfer & Fox LLP
P.O. Box 236
Helena, MT 59624
patrickfox@doubekpyfer.com
Isl Robert R. Bell

Robert R. Bell
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Steven L. Hoard (Texas Bar No. 09736600)

shoard@mhba.com
2 MULLIN HOARD & BROWN, L.L.P.
3 P. 0. Box 31656
4 Tel: (806) 372-5050/Fax: (806) 372-5086
5 Brian Glasser
BGlasser@baileyglasser.com
6 Bailey & Glasser, LLP
7 209 Capitol Street
Charleston, WV 25301
8 Tel: (304) 340-2282/Fax: (304) 342-1110
9 Steven Jay Katzman, State Bar No. 132755
1o skatzman@bmkattorneys.com
BIENERT, MILLER & KATZMAN, PLC
11 903 Calle Amanecer, Suite 350
San Clemente, California 92673
12 Tel: (949) 369-3700/Fax: (949) 369-3701
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Attorneys for Plaintiff

MARC S. KIRSCHNER, as Trustee of the Yellowstone
Club Liquidating Trust
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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MARC S. KIRSCHNER, AS TRUSTEE

OF THE YELLOWSTONE CLUB
LIQUIDATING TRUST,
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Plaintiff,
v.
Case No. CVl 1-08283 GAF (SPx)

NOTICE OF MOTION AND MOTION
FOR SANCTIONS; MEMORANDUM
OF POINTS AND AUTHORITIES IN
SUPPORT THEREOF; DECLARATION
OF BRIAN A. GLASSER
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TIMOTHY L. BLIXSETH
Defendant.
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TIMOTHY L. BLIXSETH,
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27 v.
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[Request for Judicial Notice filed

concurrently herewith]
Counterclaimant,
MARC S. KIRSCHNER, DOES 1 - 100,
Date:
Time:
Ctrm:
Location:
Judge:
May 21, 2012

9:30 a.m.
740
Roybal Fed. Bldg.
255 E. Temple St.
Los Angeles, CA
Hon. Gary. A Fees
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ase 2:11-cv-08283-GAF-SP Document 30 Filed 04/11/12 Page 2 of 23 Page ID #:598
1 TO THE PARTIES AND THEIR ATTORNEYS OF RECORD:

2
PLEASE TAKE NOTICE that on May 21, 2012, at 9:30 a.m., or as soon thereafter
as the matter may be heard before the Honorable Gary A. Fees, United States District
Judge, in Courtroom 740 of the United States District Court, Central District of
California, located at the Edward R. Roybal Federal Building and Courthouse at 255 E.
Temple Street, Los Angeles, California, Plaintiff and Counterclaim Defendant Marc S.
Kirschner ("Kirschner"), as court-appointed Trustee (the "Trustee") of the Yellowstone
8 Club Liquidating Trust ("YCL T"), will and hereby does respectfully move this Court to
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enter an order for sanctions against Timothy L. Blixseth's ("Blixseth") pursuant to the
inherent power of this Court and 28 U.S.C. 1927.
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The Trustee moves for such relief on the following grounds:
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1.
Blixseth's Counterclaim should be dismissed, and sanctions should be
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imposed, because Blixseth intentionally and improperly filed his Counterclaim against the
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Trustee personally in contravention of Fed. R. Civ. P. 13.
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2.
Blixseth's Counterclaim intentionally ignores the Barton Doctrine.
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3.
Blixseth's Counterclaim has no basis in law or fact, and was filed for
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improper purposes to harass and intimidate the Trustee. Sanctions against Blixseth and
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his counsel are warranted under 28 U.S.C. 1927 and this Court's inherent authority for
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their willful abuse of judicial process and unreasonable vexatious litigation.
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This Motion is being made following the conference of counsel pursuant to L.R. 7-
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3, which took place on March 27, 2012, and March 29, 2012, via the telephone call,
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voicemail and correspondence by Plaintiff's counsel to and from Christopher Conant,
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counsel for Blixseth.
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II
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II
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II
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II
NOTICE OF MOTION AND MOTION FOR SANCTIONS; DECLARATION OF
BRIAN A. GLASSER
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This Motion is supported by the accompanymg Memorandum of Points and
Authorities, the declaration of Brian A. Glasser, the Request for Judicial Notice filed
3 concurrently herewith, as well as all pleadings and papers on file with the Court in this
4
case, all other facts and matters of which this Court may take judicial notice, and such
other oral and written arguments or evidence that may be presented at any hearing on the
Motion.
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By: SI Steven Jay Katzman
Steven Jay Katzman
MARC S. KIRSCHNER, as Trustee of the
Yellowstone Club Liquidating Trust
BAILEY & GLASSER, LLP
Brian A. Glasser
Admitted Pro Hae Vice
Steven L. Hoard
John G. Turner
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BRIAN A. GLASSER
(20 of 387)
TABLE OF CONTENTS
2
3
Page(s)
I.
INTRODUCTION ..................................................................................................... 1
II.
BACKGROUND ....................................................................................................... 3
A.
Blixseth's Attacks on the Courts ..................................................................... 3
B.
Blixseth's Attacks on Lawyers and Law Firms .............................................. 5
C.
Blixseth's Attacks on Politicians .................................................................... 8
D.
Blixseth's Current Attack on the Trustee ........................................................ 9
7
8
9
Io
III.
LEGAL STANDARDS ........................................................................................... 11
IV.
ARGUMENT ........................................................................................................... 12
11
A.
Blixseth Has Filed a Legally Frivolous Counterclaim .................................. 12
12
B.
Blixseth's Counsel Should be Sanctioned Under 28 U.S.C. 1927............. 14
C.
Blixseth Continues to Relitigate Issues that Have Already Been

Decided .......................................................................................................... 15
13
14
15
V.
CONCLUSION ........................................................................................................ 17
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BRIAN A. GLASSER
(21 of 387)
TABLE OF AUTHORITIES
Cases
Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337 (9th Cir. 1995) .......... 11
Benderv. Williamsport Area Sch. Dist., 475 U.S. 534 (1986) ..................................... 2, 12
5
6
Blixseth v. Brown, et al., _ _ F. Supp. 2d _ _, 2012 WL 691598, at *1 (D. Mont. Mar.

5. 2012) ............................................................................................................ 2, 7, 13
Christian v. Mattel, Inc., 286 F.3d 1118 (9th Cir. 2002) ................................................... 11
Edwards v. General Motors Corp., 153 F.3d 242 (9th Cir. 1998) ..................................... 14
In re Adbox, Inc., 488 F.3d 836 (9 h Cir. 2007) ............................................................. 2, 12
10
11
12
In re Bankers Trust Co., 658 F.2d 103 (3d Cir. 1981) ......................................................... l
In re Yellowstone Mountain Club, LLC, 436 B.R. 598 (D. Mont. 2010) ............ 3,7, 10, 16
13
Leon v. IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006) ............................................... 11, 14
14
Overnight Transp. Co. v. Chicago Ind. Tire. Co., 697 F.2d 789 (7th Cir. 1983) .............. 14
15
16
Primus Auto. Fin. Servs. Inc. v. Batarse, 115 F .3d 644 (9th Cir. 1977) ........................... 11
Quach v. Cross, No. CV-03-09627, 2004 WL 2860346, at *4 (C.D. Cal. June 10, 2004)13
17
18
Shafii v. British Airways, PLC, 83 F .3d 566 (2d Cir. 1996) ............................................. 14
19
Skidmore Energy, Inc. v. KPMG, 455 F.3d 564 (5th Cir. 2006) ...................................... 11
20
Toombs v. Leone, 777 F.2d 465 (9 1h Cir. 1985) .................................................... 12, 14, 15
21
West Coast Theater Corp. v. City of Portland, 897 F.2d 1519 (9th Cir. 1990) ................. 14
22
Statutes
23
28
u.s.c. 1927 ........................................................................................... 2, 11, 12 14, 15
24
25
Rules
26
Fed. R. Civ. P. 9 ................................................................................................................. 13
27
Fed. R. Civ. P. 13 ........................................................................................................... 1, 12
28
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BRIAN A. GLASSER
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ase 2:11-cv-08283-GAF-SP Document 30 Filed 04/11/12
I.
Page 6 of 23
Page ID #:602
INTRODUCTION
Plaintiff and Counterclaim Defendant Marc S. Kirschner, as Trustee ("Trustee") of
3 the Yellowstone Club Liquidating Trust ("YCLT"), respectfully submits this Motion for
4
Sanctions ("Motion for Sanctions") against Defendant and Counterclaim Plaintiff
5 Timothy L. Blixseth ("Blixseth"). The YCLT was formed as part of Confirmed Plan in a
6
bankruptcy case long pending before the Bankruptcy Court in Montana.

This Motion for Sanctions is being filed contemporaneously with the Trustee's
8 Motion to Dismiss ("Motion to Dismiss") all counts of Blixseth's Counterclaim, which

9 seeks, without basis, damages in the amount of Six Billion Dollars ($6,000,000,000.00). 1
10
In support of this Motion for Sanctions, the Trustee respectfully states that:
11
I.
Blixseth's Counterclaim should be dismissed, and sanctions should be
12
imposed, because Blixseth filed his Counterclaim against the Trustee personally when the
13
Trustee personally is not the plaintiff in this matter. Mr. Kirschner has appeared in his role
14
as the Trustee of the YCLT pursuant to a court-approved Confirmation Order approving
15
the Plan or Reorganization of the Yellowstone Club, and pursuant to court-approved
16
assignment of this specific lawsuit; he has not appeared in any individual capacity. The
17
Trustee sues solely as representative of the Trust. The beneficiaries of the YCLT are
18
numerous former creditors of the Yellowstone Club Debtors. See Request for Judicial
19
Notice ("RJN"), Exs. H (Third Amended Joint Plan of Reorganization) and I (Order
20
Confirming Plan).
21
The Ninth Circuit has explained that "[a] counterclaim under Rule 13 must be
22
against an 'opposing party.' Thus a party sued by a trustee may assert a counterclaim
23
against the trustee, but only if the trustee is an 'opposing party' within the meaning of
24
Rule 13. It is well-established that when a party sues in his representative capacity, he is
25
26
27
28
Blixseth's outrageous request for damages in the amount of six billion dollars is not
based in law or fact, and is so unreasonable as to amount to bad faith. See In re Bankers
Trust Co., 658 F.2d 103, 109 (3d Cir. 1981) (holding that "[e]ven if [the party's] original
claim of $35 million is not considered, the evidence supports a conclusion that [the party's
pretrial estimates of its damages were so unr1asonable as to amount to bad faith").
BRIAN A. GLASSER
(23 of 387)
ase 2:11-cv-08283-GAF-SP
Document 30 Filed 04/11/12
Page 7 of 23
Page ID #:603
not subject to counterclaims against him in his individual capacity." In re Adbox, Inc.,
2 488 F.3d 836, 840 (9th Cir. 2007) (citations omitted); Bender v. Williamsport Area Sch.
3 Dist., 475 U.S. 534, 543 n.6 (1986) ("Acts performed by the same person in two different
4 capacities are generally treated as the transactions of two different legal personages.").
5
2.
Sanctions are also warranted because Blixseth intentionally ignored the
6 Barton Doctrine, a lrnown and clear precedent in the Ninth Circuit. By filing his
7 Counterclaim, Blixseth lrnowingly violated the Barton Doctrine just three days after the
8 United States District Court for the District of Montana dismissed Blixseth's claim there
9 on Barton grounds. See Blixseth v. Brown, et al., __ F. Supp. 2d __ , 2012 WL
10
691598, at *1 (D. Mont. Mar. 5. 2012) (dismissing Blixseth's conspiracy and state-law
11
claims against 10 bankruptcy-related professionals and their law firms) (publication
12
forthcoming) ("Dismissed Lawsuit Against Professionals").
13
Blixseth raises the same frivolous conspiracy-based claims against the Trustee in
14
the Counterclaim that he has raised against practically every professional adverse to him
15
in the Yellowstone bankruptcy proceedings. Blixseth has even falsely accused a federal
16
court of destruction of evidence and improper political influence. Blixseth's
17 misconduct must be halted. So too should the conduct of his attorneys be halted,
18
especially where, as here, these attorneys are essentially "in house" attorneys or who have
19
little to no professional independence and are beholden to Blixseth.
20
21
Blixseth's Counterclaim has no reasonable basis in law or fact. The Counterclaim is

designed simply to force the Trustee -
22 judicial resources.
23
and this Court -
to waste time, money, and
It is also seeks to intimidate the Trustee. Permitting this kind of
litigation will have a chilling effect on bankruptcy trustees and professionals who
24 routinely work on such matters. Accordingly, this Court should both dismiss Blixseth's
25
Counterclaim and impose substantial sanctions on him and his counsel pursuant to the
26
inherent authority of this Court and 28 U.S.C. 1927.
27 II
28 II
2
BRIAN A. GLASSER
(24 of 387)
II.
BACKGROUND
The Trustee is the latest in a long, ever-growing line of targets of Blixseth's
outrageous conspiracy theories. Those conspiracy theories date back to at least 2005,
when the Credit Suisse loan was executed, long before the Trustee's appointment as
Trustee of the YCLT in 2009.
Among those Blixseth has accused of conspiring against him are: (1) judges and
law clerks involved in the bankruptcy proceedings; (2) attorneys and law firms involved
in the bankruptcy proceedings; (3) political figures and institutions, including the
Governor of Montana and the Montana Department of Revenue ("MDOR").
10
A.
J1
Blixseth's attacks on the Courts began after The Honorable Ralph B. Kirscher,
12
presiding judge for the United States Bankruptcy Court, District of Montana, issued an
13
adverse opinion against Blixseth following a two-week trial that spanned month. He found
14
that "[t]he record is riddled with instances where Blixseth breached his fiduciary duties."
15
In re Yellowstone Mountain Club, LLC, 436 B.R. 598, 670 (D. Mont. 2010) ("AP-14").
Bli:xseth's Attacks on the Courts
16
Since that time, Blixseth has consistently attacked Judge Kirscher and his staff. For
17
instance, on November 18, 2010, Blixseth filed a prose Motion to Disqualify Bankruptcy
18
Judge Kirscher.
19
Blixseth outrageously charged that:
20
21
22
23
24
25
26
27
28
See RJN, Ex. A (Motion to Disqualify Bankruptcy Judge Kirscher).
Judge Kirscher has pre-judged that the Yellowstone Club

bankruptcy petition was filed and plan was proposed in good faith;
Judge Kirscher has invited and entertained ex parte advocacy
against Mr. Blixseth's counsel and Mr. Blixseth. Judge Kirscher
had ex parte communications in a hotel with Cross Harbor Capital
Partners LLC concerning Cross Harbor's agenda for the
Yellowstone Club bankruptcy, which depends upon successful
litigation against Mr. Blixseth; Judge Kirscher's law clerk has
engaged in ex parte communications with one of Mr. Blixseth's
adversaries, urging his adversary to finalize a settlement with Mr.
Blixseth before Mr. Blixseth could renege; Numerous times Judge
Kirscher ruled on important motions against Mr. Blixseth before
Mr.
Blixseth
had
an 3opportunity to file a response
BRIAN A. GLASSER
(25 of 387)
permitted under the rules; Judge Kirscher entered a $40 million

judgment against Mr. Blixseth before Mr. Blixseth had an
opportunity to respond to the motion to reconsider ....
2
3
Id.atl-2.
More recently, during a March 6, 2012 hearing before Judge Kirscher, Blixseth's
counsel alleged improper political influence on the Court. The Court responded as
6 follows:
7
THE COURT: But then you're trying to insinuate that, because

he [Sam Byrne] had a meeting with the governor, that that
somehow impacts this court or affects this court? That is totally
incorrect.
MR. FLYNN: Your Honor, only the Court knows whether he's
been subjected to outside influence. The inference - THE COURT: Let me set the record straight. It has not. I have
not had a discussion with a governor about this matter. It would
be totally inappropriate. I take these rules very seriously. I feel
rather insulted by some of the innuendo, inferences, and
innuendos that you are stating.
8
9
10
11
12
13
14
15
See RJN, Ex. B (Transcript of Hearing of March 6, 2012), at 19-20.

Finally, Blixseth' s counsel suggested at the same hearing that Judge Kirscher had
16
17
destroyed evidence:
18
MR. FLYNN: .... for example, during AP-14, this court said
there were four CDs on the 400-page privilege log with Mr.
Brown and these various individuals. Yet on July 25th, this
court said there was only one CD ....
THE COURT: Now, the other point I want to raise: You raised
this, this CD and the e-mails. I have in my possession what was
given to me at the court, all that was given to me. And I take
offense at you suggesting that this court or this clerk's office
has lost anything. That was the insinuation. Now, if you have a
factual basis to make that kind of statement, bring it on.
MR. FLYNN: Yes, your Honor, I do ....
19
20
21
22
23
24
25
26
27
28
See id.
Judge Kirscher exited the courtroom and subsequently returned with the four CDs,
once again proving that Mr. Blixseth's insinuations were blatantly false, to wit:
4

BRIAN A. GLASSER
(26 of 387)
THE COURT: ... .I just want to clear up something that Mr.

Flynn tried to suggest. Mr. Flynn, there are four disks.
They're right there. There are the e-mails that were handed
to me during the trial in AP-14. And I take exception to
your comment that there's one or there's - - that suggests
that they were missing.
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
See id. at 19, 61-62 (emphasis added).

Blixseth's ill motive and conduct concerning the courts is also apparent from his
texts to his ex-wife, Edra Blixseth. For example, he sent a text stating:
OK, so you... byrne ... and the corrupt judge are all going
down. . . . . oh I forgot Gary DiSilvestri too . . . stand by
criminals. . .. And all of you are going to be indicted, you are
the center of evil and your little fat boy byrne is about to fall.
You were so greedy. . . . you should have been happy to get PC
and YC .... oh no, you and fat boy planned this whole charade
and wanted my half and guess what .... there was a few who
figured out our game ..... and they are going to haunt you the
rest of your life. You and your gang are going to jail .... as
you should. The question now is who will rate [sic] out who
and make the first deal. You thought you were covered with a
corrupt judge .... guess what, there are federal employees a lot
hig her [sic] than him who get it. The best is about to come and
you are first on the list. .. enjoy the ride.
17
18
See RJN, Ex. J at Ex. 5 (Text message from Blixseth to Edra Blixseth (Sept. 14, 2010
19
9:46 PM). Blixseth's conduct demonstrates his consistent intent to intimidate, threaten,
20
and perpetuate vexatious litigation.
Blixseth's Attacks on Lawyers and Law Firms
21
B.
22
On June 8, 2011, Blixseth brought a wide-ranging and frivolous lawsuit against
23
nearly all the attorneys and law firms adverse to him in the bankruptcy proceedings in the
24
form of the Dismissed Lawsuit Against Professionals. Blixseth's wide-ranging claims
25
included legal malpractice, breach of fiduciary duty, fraud, breach of contract, equitable
26
indemnification, comparative indemnity, contribution malpractice for failing to disclose
27
conflict of interest, conspiracy, and aiding and abetting commission of torts. Blixseth
28
accused a number of individuals, including the

5
following
bankruptcy-related

BRIAN A. GLASSER
(27 of 387)
professionals and entities in the Yellowstone case:

2
Stephen Brown, Esq.: Chairman of the Unsecured Creditors Committee;
Garlington, Lohn & Robinson, PPLP: a law firm based in Missoula, Montana and
affiliated with the Chairman of the Unsecured Creditors Committee;
James A. Patten, Esq.: Debtor's Counsel;
Patten, Peterman, Bek.kedahl & Green, PLLC: a law firm based m Billings,
Montana and affiliated with Debtor's Counsel;
J. Thomas Beckett, Esq.: Counsel to the Unsecured Creditors Committee;
Parsons Behle & Latimer: a law firm based in Salt Lake City, Utah, and affiliated
1O with Counsel to the Unsecured Creditors Committee;

11
Thomas L. Hutchinson, Esq.: Debtor's Counsel;
12
Bullivant, Houser, Bailey, P.C.: a law firm based m Seattle, Washington and
13
affiliated with Debtor's Counsel;
14
Samuel T. Byrne: a Principal of the CrossHarbor Capital Partners;
15
CrossHarbor Capital Partners: an investment firm based in Boston, Massachusetts
16
and affiliated with the Reorganized Debtor; and

John Does 1-100: whoever or whatever they may be, just for good measure.
17
18
(See RJN, Ex. C (Complaint filed by Blixseth).)
19
In short, Blixseth accused attorney Steven Brown of breaching his fiduciary duties
20
to Blixseth and of "cooperating with Mr. Blixseth's opponents to conceal his own
21
malpractice artd as requested by said opponents then lied under oath to assist those
22
opponents gain a judgment against Mr. Blixseth." Id.
at~
3.
23
Bankruptcy Judge Kirscher's flatly rejected similar claims by Blixseth in AP-14.
24
See RJN, Ex. D (Memorandum of Decision). In his August 2010 Order, Judge Kirscher
25
concluded that:
26
II
27
II
28
II
6
BRIAN A. GLASSER
(28 of 387)
Blixseth claims that Brown's alleged violations of Blixseth's

attorney-client privilege has tainted every aspect of the trial in
this matter. Given the seriousness of the allegation, the Court
instructed the Committee to initially produce copies of those
emails communications ... that originated from Brown. The
Committee complied with the Court's request .... The Court
carefully reviewed each of the emails and found ... absolutely
no evidence that Brown violated Blixseth's attorney-client
privilege. In sum, Blixseth failed to show any actual disclosure
of attorney-client communication. Blixseth's arguments on
this point were nothing but baseless allegations intended to
"derail these proceedings."
2
3
4
5
6
7
8
9
In re Yellowstone Mountain Club, LLC, 436 B.R. at 636-37(emphasis added).
10
More recently, as mentioned above, the Montana District Court concluded that
11
"[a]ll of Blixseth's claims are subject to the Barton doctrine, and no exceptions apply.
12
Since Blixseth did not first seek leave from the Bankruptcy Court before he filed his
13
complaint in the district court, the Court does not have subject matter jurisdiction over his
14
claims" in the Dismissed Lawsuit Against Professionals. Brown, __ F. Supp. 2d. __ ,
15
2012 WL 691598, at *22.
16
Throughout these frivolous and vexatious litigation proceedings, Blixseth and his
17
attorneys have sent a steady stream of intimidating emails and letters.
18
Blixseth's counsel, Christopher J. Conant and Philip H. Stillman, made the following
19
statements to the lawyer for the bankruptcy trustee of Mr. Blixseth's ex-wife, Edra
20
Blixseth:
21
For example,
If you have simply taken [Edra's] representations at face value
26
then I question your fulfillment of duties as a lawyer under the

Montana Rules of Professional Conduct .... I will note that
you have not denied Mr. Samson has had ex parte
communications with Judge Kirscher and his staff concerning
the Blixseths or the Yellowstone Mountain Club. We look
forward to receiving these documents through the discovery
process and questioning Mr. Samson at his deposition (if the
case ever gets that far).
27
See RJN, Ex.Kat Exhibit A (Email from Philip H. Stillman, Esq., Blixseth's attorney, to
28
Dave Cotner, the Lawyer for his ex-wife's bankruptcy
22
23
24
25
trustee,
an
Attorney

BRIAN A. GLASSER
at
(29 of 387)
Filed 04/11/12
Datsopoulos, MacDonald & Lind, P.C., Nov. 9, 2011 3:45 p.m.).

2
In separate
correspondence, Mr. Stillman states:

I write this separate concurrence to make sure that you, your
client, and all other responsible persons understand the Mr.
Blixseth intends to file a Motion for Sanctions pursuant to Rule
11 (or 7011 as the case may be) against every single person and
lawyer that continues to assert these frivolous claims against
him.
See id., (Email from Philip H. Stillman, Esq. to Dave Cotner, Oct. 22, 2011 6:27 p.m.).
4
5
C.
In another proceeding, Blixseth accused the Governor of Montana and his staff of
10
influencing legal matters against him through the MDOR. His counsel opined during a
11
hearing that, "[t]o gain support for his plans for the Club, Mr. Byrne [of CrossHarbor] met
12
with the Governor of Montana and his staff .... Not surprisingly, during the Yellowstone
13
Club bankruptcy, the Governor made public statements critical of Mr. Blixseth."
14
RJN, Ex. E (Opposition to Motion to Quash Subpoenas), at 7-8.
Blixseth's Attacks on Politicians
See
15
Blixseth's counsel added during that same hearing that the Governor was
16
essentially misusing the MDOR, and that the "MDOR does not exist in a vacuum,
17
independent from other areas of Montana's Executive Branch. It is of course part of a
18
much larger organization: the administrative branch of the government of the State of
19
Montana. Mr. Blixseth believes that the Movants had numerous discussions with high
20
ranking officials from the State of Montana outside of MDOR, relating to Movants' and
21
Montana's common adversary. Mr. Blixseth further believes that these discussions played
22
a role in MDOR's unprecedented filing of an involuntary bankruptcy petition." Id. at 12-
23
13.
24
II
25 II
26
II
27
II
28
II

BRIAN A. GLASSER
(30 of 387)
D.
Blixseth's Current Attack on the Trustee
On March 9, 2012 -
nearly seven (7) years after Blixseth claims that various
conspiracies against him started -
as a participant in the conspiracies: the Trustee.2 The Trustee was appointed by the
Blixseth finally added the last person he could think of
5 Bankruptcy Court in 2009 and succeeded to all of the assets and claims of the Debtors.
6
In this case, Blixseth alleges in summary that the Trustee is personally liable to him
7 because the YCL T and its Trustee allegedly are the "pawns" of Credit Suisse and
8
CrossHarbor, Counterclaim at 1-2, and further that the YCLT and its Trustee personally
9 are "now the primary instrumentality in Credit Suisse and CrossHarbor implementing
IO
their scheme against Mr. Blixseth to defraud Mr. Blixseth by extracting from him
11
hundreds of millions of dollars' worth of assets that he received out of the MSA." Id. at
12
61.
13
These are not "new" claims by Blixseth, although now naming the Trustee
14
individually certainly is new. In fact, in AP-14 these very issues were set out by the
15
Blixseth in the Amended Joint Pretrial Order ("Pretrial Order") filed on February 17,
16
2010. See RJN, Ex. F (Pretrial Order). The Pretrial Order was approved by the Court the
17
next day, on February 18, 2010. See RJN, Ex. G (Order). Among the items approved for
18
trial were the following:
19
(1) "Whether the Trust's counterclaims against Blixseth are

barred by the Trust's lack of standing because it is controlled
by a party who participated in the allegedly bad behavior";
and
20
21
22
2
23
24
25
26
27
28
Blixseth has, however, made a habit of threatening bankruptcy trustees. See, e.g., RJN,
Ex. K, at Exhibit A (Email from Christopher J. Conant, Blixseth's Counsel, to David
Cotner, Counsel for Richard Samson, Blixseth's ex-wife's bankruptcy attorney, Oct. 22,
2011 at 4:32 p.m.) (""The only reason the Trustee is seeking to keep it in the Montana
bankruptcy court is because he and his attorneys know that the judge there is openly
biased against Mr. Blixseth .... "); see id. (Email from Philip H. Stillman, Esq. to David
Cotner, Counsel for Richard Samson, Blixseth's ex-wife's bankruptcy attorney, Oct. 25,
2011 5:59 p.m.) ("Mr. Blixseth intends to hold you and your firm and the Trustee liable
for all costs, attorney's fees and other damages ... through sanctions and a malicious
prosecution motion.").
9

BRIAN A. GLASSER
(31 of 387)
2
3
4
5
(2) "Whether the Trust's counterclaims against Blixseth are

barred as a result of proximate causation by the conduct of
other parties, including but not limited to, the collusion of
Edra Blixseth, Sam Byrne and CrossHarbor Capital to
thwart a purchase of the Debtors by filing a Chapter 11
petition in bad faith."
See RJN, Ex. F, Sections II(C)(l4) and VII(26 and 29) (emphasis added).
The Bankruptcy Court considered all of these claims, and unambiguously rejected
them. To quote from the dispositive passage from the Bankruptcy Court' main opinion,
which was published after the Bankruptcy Court conducted a two-week trial over the
course of several months:
10
11
12
13
14
15
16
17
18
19
20
Since its inception, the largest creditor in this case has been Credit
Suisse and the Prepetition Lenders. YCLT is only a successor of
the Debtors. Blixseth has shown no evidence to suggest any
wrong doing by the Debtors. Similarly, YCLT is not a
successor in interest to Edra and the Court, to date, has not
agreed with Blixseth 's grand conspiracy theory regarding
Byrne and Edra. Thus, the Court is not convinced that YCLT
has unclean hands in this matter. Moreover, while Credit Suisse
was permitted to appoint four of the seven members to the Trust
Advisory Board, the Court is not convinced that Credit Suisse
controls YCLT. The Court also agrees with YCLT that no
basis exists whatsoever upon which any misconduct that may
have been engaged in by Credit Suisse should be imputed upon
YCLT.
21
22
In re Yellowstone Mountain Club, LLC, 436 B.R. at 674-75 (emphasis added).
23
Despite these rulings, and despite the adverse Memorandum of Decision entered
24
against him, Blixseth has attacked this duly appointed Trustee personally for conspiracy.
25
And Blixseth additionally includes a claim under RICO for Six Billion Dollars. This is
26
the first time that the Trustee has been named as a conspirator, and he has been named in
27
28
10

BRIAN A. GLASSER
(32 of 387)
1 his personal capacity. 3
2 III.
LEGAL STANDARDS
"Filing a complaint in federal court is no trifling undertaking. An attorney's
signature on a complaint is tantamount to a warranty that the complaint is well grounded
in fact and 'existing law' (or proposes a good faith extension of the existing law) and that
is not filed for an improper purpose." Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th
Cir. 2002). Where allegations in a complaint are factually groundless, it is appropriate to
sanction the client as well as the attorney who signs and files the complaint. See Skidmore
Energy, Inc. v. KPMG, 455 F.3d 564, 568 (5th Cir. 2006) (affirming sanctions against a
1O client "for the numerous factually groundless allegations in their Complaint").

11
'" [C]ourts have inherent power to dismiss an action when a party has willfully
12
deceived the court and engaged in conduct utterly inconsistent with the orderly
13
administration of justice."' Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006)
14
(quoting Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir.
15
1995). A finding of "'willfulness, fault, or bad faith' is required for dismissal to be
16
proper." Id. "Under its 'inherent powers,' a district court may also award sanctions in the
17
form of attorneys' fees against a party or counsel who acts 'in bad faith, vexatiously,
18
wantonly, or for oppressive reasons." Id. at 961 (citing Primus Auto. Fin. Servs. Inc. v.
19
Batarse, 115 F.3d 644, 648 (9th Cir. 1977).
20
28 U.S.C. 1927 provides, "Any attorney or other person admitted to conduct
21
cases in any court of the United States ... who so multiples the proceedings in any case
22
unreasonably and vexatiously may be required by the court to satisfy personally the
23
24
25
26
27
28
Blixseth has, however, made it a habit of threating Mr. Kirschner. See, e.g., Declaration
of Brian A. Glasser ("Glasser Deel."), Ex. 1 (Letter from Philip H. Stillman, Blixseth's
attorney, to Mr. Kirschner of Sept. 20, 2011) (stating that, "if you intend to file this action,
please give notice to your insurance carriers of Mr. Blixseth's intended claim against you,
your firm, and all attorneys cooperating in the filing of your frivolous and bad faith
complaint.").
11
BRIAN A. GLASSER
(33 of 387)
1 excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct."
2
Id. An award of sanctions under 28 U.S.C. 1927 or the district court's inherent authority
are within a court's powers when "counsel has 'willfull[y] abuse[d] judicial processes' or
otherwise conducted litigation in bad faith." Toombs v. Leone, 777 F.2d 465, 471 (9th
Cir. 1985) (quotation omitted).
6 IV.
ARGUMENT
A.
Every aspect of Blixseth's Counterclaim is, on its face, brought in bad faith. First,
Blixseth's Counterclaim is frivolous because Blixseth filed his Counterclaim against the
Blixseth Has Filed a Legally Frivolous Counterclaim
1O Trustee personally when the Trustee personally is not the plaintiff in this matter. Mr.
11
Kirschner has appeared, and will continue to appear in any court-approved ongoing case,
12
in his role as the Trustee of the YCLT pursuant to a court-approved appointment and
13
specific assignment of this underlying lawsuit; he has not appeared in any individual
14
capacity. The Ninth Circuit has explained that "[a] counterclaim under Rule 13 must be
15
against an 'opposing party.' Thus a party sued by a trustee may assert a counterclaim
16
against the trustee, but only if the trustee is an 'opposing party' within the meaning of
17
Rule 13. It is well-established that when a party sues in his representative capacity, he is
18
not subject to counterclaims against him in his individual capacity." In re Adbox, Inc.,
19
488 F.3d 836, 840 (9th Cir. 2007) (citations omitted); see also Bender v. Williamsport
20
Area Sch. Dist., 475 U.S. 534, 543 n.6 (1986) ("Acts performed by the same person in
21
two different capacities are generally treated as the transactions of two different legal
22
personages.").
23
Moreover, the underpinnings of Blixseth's allegations against the Trustee are not
24
warranted by existing law, or a good faith argument for an extension, modification or
25
reversal of the same. On top of his groundless decision to sue the Trustee personally,
26
Blixseth totally ignored the seminal holding of the Barton Doctrine.
27
Counterclaim seeking at least $6,000,000,000 (Six Billion Dollars) in damages against the
28
Trustee personally was filed just three days after his similar conspiracy-based claims
His brazen
12

BRIAN A. GLASSER
(34 of 387)
1 against other bankruptcy- related officials and appointees were dismissed in a Blixseth v.
2 Brown, et al., _ F. Supp. 2d _, 2012 WL 691598, at *1 (D. Mont. Mar. 5, 2012).
3 Moreover, the re-filing of the Counterclaim 4 technicality 5
after the initial filing was dismissed on a
gave Blixseth numerous more days to reflect on the Barton Doctrine.
As part of his Counterclaim, Blixseth frivolously brought a civil RICO conspiracy
6 count, which is the "litigation equivalent of a thermonuclear device." Quach v. Cross, No.
7
CV-03-09627, 2004 WL 2860346, at *4 (C.D. Cal. June 10, 2004). He did this despite
blatantly failing to meet basic pleading requirements, such as properly alleging each
element of the RICO counterclaim and satisfying the heightened requirements of Rule
10
9(b). Instead, Blixseth alleges injury that he allegedly suffered in 2005, long before Mr.
11
Kirschner became a Trustee in 2009. The failing of the Counterclaim is not due to mere
12
pleading deficiencies, however; even a cursory investigation of that facts would
13
demonstrate that there is no basis for the claim, given the elements of the claim versus the
14
actual facts in this case.
15
Blixseth did not allege any facts to establish that the Trustee ever entered into an
16
agreement with any other alleged co-conspirator to achieve any unlawful objective in
17
general, or to participate in any RICO enterprise in particular," which are key RICO
18
elements. Counterclaim at
19
conclusory statements that the Trustee is essentially a "pawn" or a "zombie." These
20
descriptions are the exact opposite of the required "agreement" for RICO purposes. Based
21
on the allegations in the Counterclaim, the Trustee merely communicated with his
22
lawyers, filed pleadings per the Trust's specific grant of authority, including the court-
23
granted authority to commence this litigation, and testified at trial and in depositions -
24
none of which is actionable, all of which is in fact conduct incumbent upon the Trustee as
25
a fiduciary. Blixseth does not allege a single fact involving any conversation,
26
communication, meeting, or action by which the Trustee could have learned about any
27
agreement between Credit Suisse, Cushman & Wakefield, or Cross Harbor to defraud
28
Blixseth. Blixseth fails to allege any facts necessary to bring a RICO claim. Rather,
iii! 121, 137, 138, 141(a)
& 143. Rather, Blixseth makes
13

BRIAN A. GLASSER
(35 of 387)
1 Blixseth brought this RICO claim to harass and intimidate the Trustee personally, and to
2
continue his pattern of dilatory tactics and vexatious litigation, as demonstrated above.
Accordingly, Blixseth and his counsel should be sanctioned for forcing Mr.
3
4
Kirschner to defend against these legally frivolous claims for relief.

Blixseth's Counsel Should be Sanctioned Under 28 U.S.C. 1927
B.
A section 1927 sanction requires "evidence of bad faith, improper motive, or
reckless disregard of the duty owed to the court." Edwards v. General Motors Corp., 153
F.3d 242, 246 (9th Cir. 1998) ("willful continuation of a suit known to be meritless"
satisfies section 1927). "Vexatious" is defined as "lacking justification and intended to
1O harass." Overnight Transp. Co. v. Chicago Ind. Tire. Co., 697 F.2d 789, 795 (7th Cir.
11
1983).
12
"A party 'demonstrates bad faith by delaying or disrupting the litigation or
13
hampering enforcement of a court order."' Leon v. IDX Sys. Corp., 464 F.3d 951, 961
14
(9th Cir. 2006) (quotation omitted). "Bad faith is present when an attorney knowingly or
15
recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of
16
harassing an opponent;" West Coast Theater Corp. v. City of Portland, 897 F.2d 1519,
17
1528 (9th Cir. 1990); see also Toombs v. Leone, 777 F.2d 465, 471 (9th Cir. 1985) (court
18
need not make express findings as to counsel's state of mind because record contained
19
sufficient evidence to support a decision); Shafii v. British Airways, PLC, 83 F.3d 566,
20
571 (2d Cir. 1996) ("The filing of repetitive and frivolous suits constitutes the type of
21
abuse for which an injunction forbidding further litigation may be an appropriate
22
sanction.").
23
Blixseth and his counsel flagrantly ignored a known and clear Ninth Circuit
24
precedent, the Barton Doctrine, by filing the instant Counterclaim without obtaining leave
25
of the Bankruptcy Court, despite having extra time to reflect due to a failure to comply
26
with the Local Rules and re-filing. This alone constitutes sufficient evidence of bad faith
27
as described by the Ninth Circuit in Leon, 464 F.3d at 961 ("demonstrates bad faith by
28
delaying or disrupting the litigation or hampering enforcement of a court order")

14

BRIAN A. GLASSER
(36 of 387)
to warrant sanctions.
2
Blixseth and his attorneys have concocted conspiracy theory after conspiracy
3 theory, refused to accept findings against him, accused judges, law clerks, and law firms
4
of conspiring against him, and perpetuated proceedings by filing repetitive lawsuits
5 throughout the country wasting judicial resources. Accordingly, Blixseth and his attorneys
6 should be sanctioned and prevented from perpetuating these dilatory and abusive tactics.
7
C.
Blixseth Continues to Relitigate Issues that Have Already Been Decided
As referenced, an award of sanctions under 28 U.S.C. 1927 or the district court's
inherent authority are within a court's powers when "counsel has 'willfull[y] abuse[d]
10 judicial processes' or otherwise conducted litigation in bad faith." Toombs v. Leone, 777
11
F.2d 465, 471 (9th Cir. 1985) (quotation omitted).
12
In his Counterclaim, Blixseth is in bad faith for attempting to relitigate issues that
13
have already been decided against him, demonstrating both an abuse of process and bad
14
faith. For instance, Blixseth and his counsel knowingly and falsely allege that Credit
15
Suisse controls the Trust and the Trustee is a "pawn." Counterclaim
16
n.2, 121-23, 137-38, 141 (I), 142-44, 159, 163-64. Blixseth alleges that:
17
18
19
20
21
22
~ii
7, 50(e), 100, 103
Credit Suisse and CrossHarbor ... appointed five of the seven

members of the YCLT Advisory Board, from which Mr.
Kirschner takes his direction and for whom he acts on behalf of.
Mr. Kirschner, at all times relevant, knows that in his capacity
as trustee for the YCLT and its illegitimate collections efforts
against Mr. Blixseth, that he is acting as the tool of and
committee over acts for Credit Suisse and CrossHarbor to
implement and execute their on-going RICO enterprise against
Mr. Blixseth.
23
~
7. In similar bad faith, Blixseth outrageously asserts that Mr. Kirschner
24
Counterclaim
25
"is and has been fully aware that he is being used by [Credit Suisse] to continue to
26
perpetuate continued efforts to collect the (Credit Suisse] debt" and adds that "Mr.
27
Kirschner knowingly perpetuates Credit Suisse's fraudulent scheme against Mr. Blixseth
28
because Mr. Kirschner stands to earn a very generous contingency fee for amounts that
15

BRIAN A. GLASSER
(37 of 387)
Document 30
he collects on behalf of Credit Suisse." Counterclaim at 103 & 103 n.2.

In fact, as Blixseth is aware and the Bankruptcy Court already found:
2
3
Since its inception, the largest creditor in this case has been
Credit Suisse and the Prepetition Lenders. YCLT is only a
successor of the Debtors. Blixseth has shown no evidence to
suggest any wrong doing by the Debtors. Similarly, YCLT is
not a successor in interest to Edra and the Court, to date, has not
agreed with Blixseth's grand conspiracy theory regarding Byrne
and Edra. Thus, the Court is not convinced that YCLT has
unclean hands in this matter. ... [T]he Court is not convinced
that Credit Suisse controls YCLT. The Court also agrees with
YCLT that no basis exists whatsoever upon which any
misconduct that may have been engaged in by Credit Suisse
should be imputed upon YCLT.
4
5
6
7
8
9
10
11
12
In re Yellowstone Mountain Club, LLC, 436 B.R. at 674-75. Despite this ruling, Blixseth
13
continues to attack the Trustee personally and claim that he is a pawn of Credit Suisse.
Mr. Blixseth adds, in bad faith, that he is a "direct victim of the RICO enterprise ..
14
ii
15
." Counterclaim at
15 (emphasis in original). In fact, the Bankruptcy Court has stated
16
clearly, "The Court is not persuaded by Blixseth's attempts to paint himself as a victim in
17
these proceedings, particularly where Blixseth was at the center of the Debtor's financial
18
woes." In re Yellowstone Mountain Club, LLC, 415 B.R. at 790.
19
Blixseth also spends pages alleging facts that predate any involvement of the
20
Trustee in 2009. For example, Blixseth describes that, "Beginning in 2003 and 2004,
21
Credit Suisse First Boston devised a financing plan .... " Counterclaim at, 16. The
22
Counterclaim contains no factual allegations that support imputation of conduct allegedly
23
occurring in 2003 to the Trustee, who was only appointed in 2009.
24
These and other attempts to relitigate issues already decided against him warrant
25
sanctions against Blixseth.
26
//
27
//
28
//
16
BRIAN A. GLASSER
(38 of 387)
V.
CONCLUSION
Based on the foregoing, and the arguments set forth in the Trustee's Motion to
Dismiss Blixseth's Counterclaim for $6,000,000,000.00 (Six Billion Dollars), the
Trustee's Motion for Sanctions (i) should be granted in its entirety, (2) monetary sanctions
at least in the amount of attorneys' fees and costs in connection with preparing and filing
the Motion to Dismiss and this Motion for Sanctions should be imposed against Blixseth
and his counsel, (3) counsel for the Trustee shall have two weeks to submit fee and cost
petitions.
9
10
11
12
13
14
15
16
17
18
19
20
21

By:

SI Steven Jay Katzman
Steven Jay Katzman
Brian A. Glasser
Steven L. Hoard
John G. Turner
22
23
24
25
26
27
28
17

BRIAN A. GLASSER
(39 of 387)
Filed 04/11/12
Page ID #:619
CERTIFICATE OF SERVICE
2
3
4
5
6
I, Coleen Grogan, declare,

That I am a citizen of the United States and am a resident or employed in Orange
County, California; that my business address is 903 Calle Amanecer, Suite 350, San
Clemente, California 92673; that I am over the age of 18 and not a party to the aboveentitled action.
That I am employed by a member of the United States District Court for the Central
District of California and at whose direction I caused service of: NOTICE OF MOTION
8 AND MOTION FOR SANCTIONS; MEMORANDUM OF POINTS AND
9 AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF BRIAN A. GLASSER
on the interested parties as follows:
10
BY ELECTRONIC MAIL: by electronically filing the foregoing with the Clerk of the
11 District Court using its ECF System pursuant to the Electronic Case Filing provision of
the United States District Court General Order and the -Government Act of 2002, which
12 electronically notifies said parties in this case:
13 Christopher J. Conant
7
14
15
I certify under penalty of perjury under the laws of the United States of America that
the foregoing is true and correct.
16
17
This certificate was executed on April 11, 2012, at San Clemente, California.
ls/Coleen Grogan/sf
Coleen Grogan
18
19
20
21
22
23
24
25
26
27
28
18
BRIAN A. GLASSER
(40 of 387)
ase 2:11-cv-08283-GAF-SP Document 30-1 Filed 04/11/12
Page 1 of 2 Page ID #:620
1 Steven Jay Katzman (California Bar No. 132755)

skatzman@bmkattomeys.com
2 BIENERT, MILLER& KATZMAN, PLC
3 903 Calle Amanecer, Suite 3 50
4 Tel: (949) 369-3700/Fax: (949) 369-3701
5
Brian Glasser
bglasser@baileyglasser.com
209 Capitol Street
Charleston, WV 25301
Tel: (304) 340-2282/Fax: (304) 342-1110
Steven L. Hoard
6
7
1o shoard@mhba.com
11
12
13
14

P.O.Box31656
Tel: (806) 372-5050/Fax: (806) 372-5086
Attorneys for Plaintiff MARC S. KIRSCHNER, as Trustee

of the Yellowstone Club Liquidating Trust
15
IN THE UNITED STATES DISTRJCTCOURT

FOR THE CENTRAL DISTRJCT OF CALIFORNIA
16
17
18
19
20
21
22
23

LIQUIDATING TRUST,
Plaintiff,
v.
Defendant.
24
25
26
Counterclaim ant,
v.
MARC S. KIRSCHNER, DOES 1-100,
27
28
Counterclaim Defendant.
Case No. cv-11-08283 GAF SPx

DECLARATION OF BRIAN A.
GLASSER IN SUPPORT OF YCLT'S
NOTICE OF MOTION AND
MOTION FOR SANCTIONS
[Notice of Motion, Motion for Sanctions
and Request for Judicial Notice filed
concurrently herewith]
Date:
Time:
Ctrm:
Location:
Judge:
May 21, 2012

9:30 a.m.
740
Roybal Fed. Bldg.
255 E. Temple St.
Los Angeles, CA
Hon. Gary. A Fees
(41 of 387)
di@. 12-35986
08/19/2013
lb. 8148363
Oktdllly. 55-2
Ptiye. 29 di 295(52 di 504)
se 2:11-cv-08283-GAF-SP Document 30-1 Filed 04/11/12 Page 2 of 2 Page JD #:621
I, Rrian A. Glasser, cieclare and state as follows:
I.
I am an attorney at the law firm of Bailey & Glasser, LLP, counsel for
Plaintiff CJnd Counterclaim Defendant Marc
Yellowstone
of the Trustee's Motion for Sanctions ("Motion"). I am a member in good standing of the
Bar of' West Virginia. I have personal knowledge of the matters stated herein, and, if
7
8
9
JO
11
12
13
14
15
16
S. Kirschner, as Trustee ("Trustee'') of the
Club LiquidCJting Trust ("YCLT'). This declaration is submitted in support
called to testify, would and could do so competently.

2.
I have represented the Trustee in a number of litigation matters in the
Montana bankruptcy court and elsewhere, and have done so since 2009. Jn this capacity, I
have become personally familiar with a
host of documents concerning Yellowstone Club-
related litigation, including corresponcience from the counsel of Timothy l .. Blixseth

("Blixseth") to the Trustee.
3.
Among the documents with which I am personally familiar is Exhibit I
attached l1erelo. (See Ex. I.) Exhibit I is a true and correct copy of a letter from Blixscth's
counsel, Philip H. Stillman, to the Trustee dated Sept. 20, 2011. (Jil)
I declare under penalty of pc1jury that the foregoing is lrue and correct.
17
18
Dated: April 11, 20 J 2
!3y:
Brian A. Gl<isser
19
20
21
22
23
24
25
26
27
28
- - - - - --
----------------------------..---- -------
(42 of 387)
U:ise. 12-35988
os119;2013
ID. 8(48363
Dklb1uy. 55-2
Case 2:11-cv-08283-GAF-SP Document 30-2 Filed 04/11/12
ViiQti. 30 di 295(53 61 504)
Page 1of12 Page ID #:622
EXHIBIT
'' 1''
(43 of 387)
CMe. 12-35986
0811)2013
ID. 8148363
Oktfiluy. 55-2
Pctgt!. 31 di 295(54 61 504)
Case 2:11-cv-08283-GAF-SP Document 30-2 Filed 04/11/12 Page 2 of 12 Page ID #:623
300 SOUTH POINTE DRIVE. SUITE 4206
MIAMI BEACH, FLORIDA 33139

TELEPHONE (888) 2354279
FACSIMILE (8881235-4279
omo1J prolillman@slillman0tssoe1atos.com
Skypp
PHILIP H. STILLMAN
SPECIALIZING IN
COMP LG X liliGATION
ADMITTED JN MASSACHUSETTS
ANO CALIFORNIA
2540 MANCHESTER AVE. SUITE B

CARDIFF. CALIFORNIA 92007
September 20, 2011
VIA EMAIL
Marc S. Kirschner
Trustee of the Yellowstone Club Liquidating Trust
J8 East 94th Street, Suite IA
New York, New York 10128
Kirschner v. Blixseth
Re:
Case No.:
Unfiled
Dear Mr. Kirschner:
J have received your September 12, 2011 Jetter to my client, Timothy L. Blixseth,
regarding notes that had originally been executed by him in favor of Blixseth Group, lnc.
("BGJ"). As you are clearly aware that Mr. Blixseth is represented by counsel, do not
communicate directly with my client again.
Turning to the substance of your Jetter, as you unquestionably know, the notes that you
refer to in your September 12, 201 1 letter have been cancelled by BGI as of August 13, 2008,
pursuant to the Amendment to the Marital Settlement Agreement and the Assumption Agreement
signed by BGI. The cancellation of both notes was not only approved by BGJ and replaced by
notes executed by Edra Blixseth, but the cancellation of the notes was approved by the California
Superior Court in an Order dated July 3, 2008, and merged into a final judgment dated October 7,
2008. In addition, as you are also aware since the Yellowstone Club Liquidating Trnst was the
plaintiff in Adversary Proceeding 09-0014, the bankruptcy court ruled in that case that the funds
received by Mr. Blixseth through the promissory notes on which you now seek to persecute Mr.
Blixseth, were distributions to BGI "and Mr. Blixseth." Your threats therefore have no legal or
factual basis and you have no good faith basis for sending your demand letter Lo my client.
A.
The Provisions Jn The MSA Bar Any Action On The Notes.

The Amendment to the MSA,
ii 3(i) provided
that
Petitioner and Respondent shall enter into an assumption

agreement by which Petitioner shall agree to assume all of the
BGI Indebtedness and save and hold Respondent completely
(44 of 387)
di. 12-35988
0811912013
16. 8(48383
Dklt:iiliy. 55-2
Pl1g@. 32 bi 295(55 di 504)
Marc S. Kirschner
Re: Kirschner v. Blixseth et al.
September 20, 2011
Page 2 of5
free and harmless from the BGI Indebtedness. The
assumption agreement shall be acknowledged and ratified by
BGI after the stock of BGJ is transferred to Petitioner.
2. Petitioner shall execute one or more notes representing the
BGI Indebtedness, which shall acknowledge that she has
assumed the BG! indebtedness and further acknowledge that
she is substituted as the sole obligor with respect to such note
or notes. BGI shall formally approve the said substitution of
obligor after the stock ofBGI is transferred lo Petitioner.
3. Petitioner, as the sale shareholder ofBGI, shall cause BGI in
consideration for the assumption of liability by Petitioner and In
recognition of her future management and control ofBGI and the
assets and entities over Which It has the right of ownership and/or
management, to release Respondent from any and all claims,
obligations or liabilities associated with the BGI hldebtedness.
In addition, as you are also aware, BGI expressly released any claims against Mr. Blixseth
in the Mutual Waiver and Release Agreement (the "Releases"). Obviously, BGI was a defined
party to the Releases and a signatory. In the Releases, BGI
hereby fully and absolutely releases and discharges Timothy and each of the
Timothy Entities (collectively, the "Timothy Released Parties"), from any claim,
right or demand that any such Edra Entity has, or may have against any of the
Timothy Released Parties based on conduct from the beginning of time until the
Effective Date relating to, or based on any fact, circumstance, event or document
signed by Timothy or any of the Timothy Released Parties ...
Releases,
if 4(b).
Finally, BGI executed an Assumption Agreement that both expressly cancelled the Notes
and released Mr. Blixseth from any claims based upon the Notes. As set forth in the Assumption
Agreement, iJ 4, "BGI hereby releases Respondent from any and all claims, obligations or
liabilities associated with the BGI Indebtedness. Simultaneously herewith, BGI is
delivering the original Respondent Notes to Petitioner to be marked 'Superceded by
Replacement Note'."
All of the provisions of the MSA, the various amendments and the Waivers and Releases
were specifically approved by the California Superior Court after an evidentiary hearing on July
3, 2008 and that approval was merged into a final judgment on October 7, 2008. TI1ose findings
are therefore both resjudicata and collateral estoppel on you, as the assignee ofBLX's rights (or
Jack thereof) in the Notes.
(45 of 387)
ume. 12-35986 uo/J_~/LUJ_,j

10. 8148363 DktE11t19. ss-2 PdQe. 33 rn 295(56
Marc S. Kirschner
September 20, 20 l I
Page 3 of5
B.
The California Commercial Code Renders YCLT's Claim Frivolous.
As you also know, the Jetter that you sent my client intentionally attached fraudulent
notes that no longer exist. I can only assume that you intentionally used copies of notes that you
know to have been cancelled in a bad faith attempt to harass and intimidate my client. Jn fact, as
you can see from the email attached hereto as Exhibit I, the exact notes that you sent to my client
have been marked superseded.
The notes are governed by California Jaw. California Commercial Code 3604(a) states:
A person entitled to enforce an instrument, with or without consideration, may
discharge the obligation of a pa1ty to pay the instrument ( l) by an intentional
voluntary act, such as sun-ender of the instrument to the party, destruction,
mutilation, or cancellation of the instrument, cancellation or striking out of the
party's signature, or the addition of words to the instrument indicating discharge,
or (2) by agreeing not to sue or otherwise renouncing rights against the party by a
signed writing.
As shown by the final version of the Notes as attached hereto, and unlike the Notes that you
fraudulently attached to your letter to my client, the Notes have clearly been mutilated and
cancelled as provided for in subsection ( 1). In addition, pursuant to the Assumption Agreement
executed by BGI, BGI expressly released Mr. Blixseth from any responsibility for repayment of
the Notes. To the extent that you do not believe that the Notes are cancelled under subsection
(I), they are also clearly cancelled pursuant to subsection (2) by the written Assumption
Agreement wherein BGI agrees not to sue Mr. Blixseth and clearly renounces any rights against
Mr. Blixseth.
Moreover, it is settled law that only the holder of the original notes can bring an action on
them. You are clearly not even a "holder" of the Notes, as whatever Notes you claim to possess
are not the cancelled original notes. Therefore, your letter seeking collection on these cancelled
notes is without any legal foundation whatsoever. See e.g. California Commercial Code 3604.
C.
The Judgment In AP 14 Bars Your Purported Claim.
In addition, as you also know since you were the plaintiff in AP-14, the bankiuptcy court
has already ruled in Jn re Yellowstone Club et al, Adversary Proceeding 09-0014 that the money
received by Mr. Blixseth from Yellowstone Club through BGI were not "promissory notes," but
were instead, "distributions." In its August 16, 2010 Memorandum of Decision, the bankruptcy
court held - as argued by you - that "The evidence clearly shows that the BGI notes were nothing
but a sham to disguise Blixseth's distributions" AP 14 Memorandum of Decision, p.77. The
bankruptcy court repeatedly collapsed the notes from BGJ to Yellowstone Club and from Mr.
Blixseth to BGI as nothing more than a way of disguising the alleged distributions. YCLT was
rn
S04J
(46 of 387)
CAM. 12-35986
08119/2013
ID. 8148363
Dktt:illry. 55-2
Page. 34 bi 295(5 I bi 504)
Marc S. Kirschner
Re: Kirschner v. BUxseth et al.
September 20, 2011
Page 4 of 5
the plaintiff in that action is therefore is bound by that finding. Are you contending that YCLT is
not bound by the judgment in AP 14? If so, let me know immediately, so that I can infonn the
District Court that it is now your position that AP 14 is not a final judgment.
D.
YCLT Is Defrauding The BLX Bankruptcy Estate And BLX's Unsecured Creditors.
Given the Uniform Commercial Code defenses, your knowledge that the Notes have been
cancelled, and the bankruptcy court's finding in AP 14 that lhe money taken by Mr. Blixseth was
a distribution rather than a loan negates any argument that YCLT is a "Holder" pursuant to the
assignment. Moreover, the bank11lptcy court found that the Notes merely reflected money that
Edra Blixseth owed to herself and t11erefore did not need to even be listed on her bankruptcy
schedules. Since you know that your claims are at best frivolous, you are knowingly
participating in a scheme to defraud BLX creditors. First, you are falsely representing that there
are bona fide claims against Mr. Blixseth based on the Notes that would go to pay the general
unsecured creditors, when you know that the opposite is true. Second, by acting on behalf of the
BLX estate, you are a fiduciary for the general unsecured creditors. By failing to disclose that
your actions subject the BLX estate to not only an award of attorney's fees, all costs, and expert
witness fees, but also all other damages proximately suffered by Mr. Blixseth caused by your
assertion of these frivolous claims and therefore greatly diminish any funds available to the
unsecured creditors, you are breaching your fiducia1y duties and committing fraud.
E.
Notice Of Proper Jurisdiction And Venue.
Please be advised that Mr. Blixseth has commenced an action against Edra Blixseth in the
Riverside County Superior Court on September 15, 2011, Case No. RIC 1115247, relating to
the Notes and her failure to comply with the terms of the Notes as set forth in the Assumption
Agreement. fn addition, as you know from the bankruptcy court's ruling in Adversary Proceeding
l 0-0088, the bankruptcy court does nol have subject matter jmisdiction over any frivolous action
that you might commence against Mr. Blixseth. Thus, please be advised that apart from any
sanctions sought as a result of your filing the frivolous complaint in general, Mr. Blixseth will
seek his costs and attorney's fees from you for any attempt to knowingly file your frivolous
complaint in the bankruptcy court in Montana or any other improper court or venue.
F.
Advisement Of Mr. Blixseth's Intention To Seek Sanctions Against You Personally, And
All Other Potentially Responsible Parties.
Please be further advised that the foregoing is not the entire discussion of Mr. Blixseth's
legal positions and rights. However, I believe that the above is sufficient to show that yom claim
is frivolous, both legally and factually, vexatious, and made in objective bad faith. Although
frivolous, this proposed lawsuit has a[ready caused Mr. Blixseth emotional distress and has
forced him to spend significant legal fees in connection with your baseless threats. He
(47 of 387)
U:ts@. 12-35986
08/19/2613
ID. 8148383
Case 2:11-cv-08283-GAF-SP Document 30-2
Dktt:iitiy. 55-2
P&g@. 35 di 295(58 di 504)
Filed 04/11/12 Page 6 of 12 Page ID #:627
Marc S. Kirschner
September 20, 2011
Pagc5 of5
anticipates that any lawsuit will damage his reputation and interfere with his existing business
dealings as well. Moreover, this newly-minted threat against Mr. Blixseth on a clearly frivolous
and factually unfounded claim appears to be pa1i of an existing pattern of vexatious litigation
instigated by you against Mr. Blixselh, including Kirschner v. Blixseth, Adv. Pro. 09-0014,
Kirschner v. Blixserh, Adv. Pro. 10-0064, Kirschner v. Blixseth, Adv. Pro. 10-0015, and Snow v.
Blixseth, Adv. Pro. 09-0018. Additionally, the Montana Department of Revenue has produced
numerous documents to Mr. Blixseth in connection with its failed attempt to put him into an
involunta1y bankruptcy and those documents reveal your active encouragement and substantial
assistance to MDOR in filing an involuntary bankruptcy petition against Mr. Blixseth in bad
faith. This pattern of vexatious litigation separately subjects you to sanctions pursuant to 28
u.s.c. 1927.
Although both the Notes and the Assumption Agreement have a provision for an award of
attorney's fees, notwithstanding that provision for an award of attorney's fees, Mr. Blixseth is
treating your letter as an immediate threat to file a frivolous action against him based on the
Notes. Should you follow through on your threats, he will, at a minimum, have the case
transferred lo a court with proper venue and jurisdiction, and file a Motion for Sanctions pursuant
to Rule 11, 28 U.S.C. I 927 and the Court's inherent sanctioning power against you, your law
firm, any lawyers that file the action, and if appropriate, the BLX Trustee and his lawyers. Upon
the successful dismissal of the action, he will then sue all potentially responsible parties for
malicious prosecution to recover his full measure of damages above and beyond the attorney's
fees that he will recover.
Therefore, if you intend to file this action, please give notice lo your insurance carriers of
Mr. Blixseth 's intended claim against you, your firm, and all attorneys cooperating in the filing
of your frivolous and bad faith complaint.
"Govern yourself accordingly,"
Very truly yours,
STILLMAN & ASSOClA TES
By: _ _ _ _ _ _ _ _ __
Philip H. Stillman, Esq.
PHS:np
cc:
Charles Hingle, Esq. (via e-mail),
John Turner (via e-mail)
(48 of 387)
UE@. 12-35986
0811912013
ID. 8/48363
DklEitliy. 55-2
Paye. 36 di 295(59 61 504)
Case 2:11-cv-08283-GAF-SP Document 30-2 Filed 04/11/12 Page 7 of 12 Page JD #:628
Exhibit 1
(49 of 387)
CM@. 12-35986
0811912013
lb.8}48363
DktEillly. 55-2
Pi:iyfi. 3 ( bl 295(60 bl 504)
Filed 04/11/12 Page 8 of 12 Page JD #:629
Janelle Manns
From:
Sent:
To:
Subject:
Attachments:
Michael Doyle [mwdoyle@bgi-legal.com)

Wednesday, September 03, 20081:26 PM
jmanns@bgi-legal.com
FW:
lysr_logo.jpg; Document.pdf; Document.pdf
Please print out for file
From: G. Frank Glabach [mailto:fglabach@Jinerlaw.com]

Sent: Wednesday1 September 03, 2008 12:03 PM
To:
111wdoyle@bgi-legal.com
Cc: Sandra Mendell

Subject:
Pursuant to your request, attached are copies of Tim's Notes In favor of BGI marked ''Superseded by Replacement Note"
as of the date of the closing.
Please contact me if you have any questions.
i>_
f,
', ;_II
LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP

.,~'7 J I 00 Glendon A venue I 14th floor
J; Los Angeles, CA 90024.3503
"M
!
main:
3 J0.500.3.500
dir: 310,,500.3509
fox: 310.500.350 I
.f.g.@bach@linerlaw.com
www.Jinerlaw.com
Notice of Privilege/Confidentiality Privileged and Confidenlial information nrny be contained in this message. If you are noJ the
addressee inclicaled in this message (or Responsible for delivery of the message to such person), you may not copy or deliver this
message fo anyone. In such cast), you should de.~troy this message and kindly notify the sender by reply email. Please advise
immediarely if you or your employer does nor consent lo Internet email for messages of this kind. Opinions, conclusions and other
infonnntion in this message 1ha1 do no! relate Jo the official business of my firm shall be understood as neither given nor endorsed by
ii.
IRS Circular 230 Disclosure: To ensure compliance with Treasury Department Regulations, we advise you that, unless otherwise
expressly indicnted, any federal lnx advice contained in this communication was not intended 01 written to be i1se.d, and cannot be
used, for rile purpose of (i) avoidi11g tax-related pen11lries under the Internal Revenue Code or applicublc stale 01 local tnx law
provisions or (ii) promoting, marketing or recommending Lo anoJher party any rax-relaled matter addressed herein.
(50 of 387)
0811912013
Ufa@. 12-35986
ID. 8i48363
OktEilliy. 55-2
Paye. 38 di 295(61 bi 504)
Case 2:11-cv-08283-GAF-SP Document 30-2 Filed 04/11/12 Page 9 of 12 Page JD #:630
Duplicate Original
PROMISSORY NOTE
Dec(;:mbcr 3 I. 2006
$58.305,147.60
~t(tii}:~1ed,
FOR VALUJ:: RECEIVED,

individually im<l collectively ("Payor")
promises Lo pay tn the order of BLIX~ TGROUP, \NC., at 7 I -534 Sahara Road, Rancho
Mirage, CA 92270, or at such other place its the hol
o his Note ("Puycc") may from Lime
to time designate in writing, th sum of Fifty Eig
11111 Three Hundred Five Thousand
5, 14 7.60) in lawful money or the
One Hundred r:orty Seven iind 6 00 Dollars ($
United Stntes, with interest then1~n om 1hcw11;,e < his Note unlil paid al the rate set forth
b~lo':"', computed nn monthly b' es. II~t.~_rc:~t '!}-each full cnlcndu.r month during the term
of this Note shall be calculat~ on the bas1s~65 or 366-day year und the actual number
of days in tlrnt month.
Xt!:I
I.
Interest Rit.~/"rhe per annum interest rate hereunder ("Note Rate") shall be al
the AFR 13Jcnded Rate.
"-.t
2.
Ml!ft~. The payment ofprincip~ifll accrued interest shall he made
upon written de1k!'h~f Payee.
C-
()
Pay~ts. Pu~
3.
..t>plication of
slrnll be applied first to the payment of
accrued in}~e~p second, at thcJj)'l'Ttin of P~to the payment ol" any late. charges due
hcreunder~third, to I.he r<..~lin ol'~cjfral of this Note.
~ Prepaymen~yor ~ny its obligatio1111ndcr this Note in f'ull or in part
at j,1~ f'rom tiir~ime wi~remium or penalty.
5.
Late ~ge. If any amount payable hereundcr is paid more than ten (I 0) days
r the due d< thM>I~ Payor promises to puy n late charge of five percent (5%) of the
nqucnt
liquidated damages for the extra expense in handling pnst due
p yments. ~
am~
), ~efault; Remedies. If defoult is macle in the pnymen( or Hl1)' amount payable

herorin - '11 due, then, at the option or Payee, the entire indebtedness evidenced hereby
shJiJ he me immedinlcly due and payable, and all such amounts, inch1ding all accrued but
un~aid inlcrest, shall thereaJ'tcr hear interest ll.L the rate of five percent (5%) per annum above
the Not.e Rate. railure to exercise this option shall not waive the right to exercise the same in
the event of any subscquenr ciefaul l.
7.
Attorney Fees. l f sui l, action. or other proceeding of uny nature whatsoever
(including any proceeding under the U.S. Bnnkruptcy Code) is instituted in eonnec1ion with
I - PROMISS()J(Y NOTE
(51 of 387)
0811912013
Ufae. 12-35986
lb. 8148363
DkLEliuy. 55-2
Phge. 39 al 295(82 bi 504)
Case 2:11-cv-08283-GAF-SP Document 30-2 Filed 04/11112 Page 10 of 12 Page ID #:631
any controversy arising out or this agreement or lo interpret or en force uny rights hereunder,
the prevailing party shall be entitled to recover its ntrorney fees, paralegals, accotmtanls, and
other experts' fees, and all other fees, cosL~, nrnl expenses acrualiy incurred und reasonably
necessary in connection rhe.rewith, a$ detcnnincd by the courr at trial or on any appeal 01
review, in addition to all other amounts provided by law.
8.
Miscellaneous.
8. I
Every person or entity at any time liable for the payment of the
indebtedness evidenced hereby waives presentment for payment, demand and notice
nonpayment of this Note. Every such person or entity further hereby consents to any
or
extension of the lime nf payment hereof or other modification of the terms or puyment of this
Note. the release oJ' all or any part of the security he.re for. or the reie::ise of any parly liable for
the payment of the indebtedness evidenced hereby at any time and from time lo time, u1. the
request of anyone now or hereuftcr Iinblc therefor. Any such extension or release may be
made without notice to any of such personx or entities and without discharging their Iiubil ity.
8.2
TI1c hc<idings to the various sections have been inserted for convenience
of reference only and do not define, limit, modify, 01 expand the express provisions of this
Note.
8.3
This Note is made with reference to and is to he construed in uccordunce
with the laws of the state ol'Cillif'ornia.
2 - PROMISSOHY NOTE
(52 of 387)
u:rse. r2-35986
08119/2013
ID. 8/48363
DktEliliy. 55-2
Paye. 40 bl 295(63 61 504)
Case 2:11-cv-08283-GAF-SP Document 30-2 Filed 04/11/12 Page 11of12 Page ID #:632
Duplicate Original
PROMISSORY NOTE
December 31. 2006
$I 40,R I9,333.28
FOR VALUE RECEJVF.D, (Lhe undersigned, individually and collectively ("Payor")

promises to pay to the order of BLIXSP.TH CJROtJP, INC., at 71-534 Sahara Ru<1d, Rancho
Mirage, CA 92270, or at such other place ns the holder ofLhis Note ("Payee") may from time
to time designnte in writing, the sum ofOne HL1ndred Forty Million Eight !Tt1ndred Nineteen
Thousand Three Irundrcd Thirty Thre~d 28/J 00 Dollars ($140,819,333.28) in lawful
money of the United Suites, wi~n~ereo11 01 , he date ofthis Nole until paid a.t thc
rate set forth below, computed 01 1 thly ba
. nterest for each full ealendur mnnlh
during the term of this Note shall be aJculatec!J)l' Lhe basis ofa 365 or 366-day year and the
nctual number or days in !hut month.
"" ~
...,,
1.
Interest Rat~1e per :m n e.l'est rate hereunder ("Note Rate") shall be ell
the same rnte Payee is requ~o pay Yelin st.one Moumain Club, LLC under paragraph
23t\ nfthe Credit A >rcemcnt cn!ercd into between Yellowstone Mountain Club, I J .C,
Yellowstone Develo
.. LC and Hig Sky Ridge, U.C ns Horrm.vers, and Credit Suisse
First Boston, dated S 1i iber 30, ~
2.
M~t
i . The payn~of pr~:~l!E_'.!_l alld all accrued interest shal I be made
t1pon written d or P<Jyee.
'\
-~
..fl;
3. ~pplication of~ment~1~11ents :;ha.II be ilpplicd first l.n 1hc payment of

accrued int s ; second, at ~option~fee, to the payment of any latc charges due
hereunder;
third, ro t~'ltluc,z@cipal of this Note.
~Prepa~r(el)t. _Pay~;-~repa~
its obligation under this Note in full or in part

at an~e or from~""'fo t11ne ~(premium or pem11ly.
\/"""\ 5.
La~1argc.
ff u.ny amount payable hereunder is paid more thnn ten (I 0) days
v af1/ti1e clue d~ereof, Payor promises 10 pay a late charge or live percent {5%) of the
a~J~~
payn1~
clelinquent
liquidated damages for the extra expense in handling past due
{ 6.
Default; Remedies. Tr default is mnde in rhe payment of any amount payable
hereunder when due. then, m 1.he op1ion of Payee, the entire indebtedness evidencecl hereby
shall become immelfoHely due:: and payab!G, and all such amounts. incll1ding all 11ccrL1ed buL
unpaicl i111eres1, shall therealkr bear interest at the rate of five percent (5%) per annum above
lhc Nole Rate. Fail\Jrc. lo excn.:isc this option shall not waive tile righl to exercise !he same in
the event of any subsequent default.
l
PIWMISSORY NOTE
(53 of 387)
u:rsti. 12-35986
0211912013
ID. 8(48363
OkLEriuy. 55-2
Paye. 41bl295(6461 504)
Filed 04/11/12 Page 12 of 12 Page ID #:633
7.
Attorney Fees. lf suit, <1Ction, or other proceeding of any nature whatsoever
(including. a11y proceeding under Lhe U.S. Bankruptcy Code) is instituted in connection with
any controversy arising out ol'this agreement m to interpl'et or enforce any rights hereunder,
the prevailing party shall be entitled to recover its al!orney foes, puralegals, accm111tants, and
other experts' fees, and all other fees, costs, and expenses actually incurred and reasonably
necessary in conn0ction therewith, as determined by the co1111. ar trial or on any appeal or
review, in addition to all other amounts provided by law.
8.
Miscellaneous.
8. I
Every person or entity at any rime liable for the puyment of' the
indebtedness evidenced hereby waives presentment !'or payment, demand and not.iec or
nonpaymenl of this Note. Every such pe.rson or entity further hereby consents to any
extension orthe time of payment hereor or othel' modifica\ion or !he (errns of payment or this
Note. the release t1f al I or any part of the security here for, or the release of' any party liahlc J'or
the payment of the indchtec.lncss evidenced hereby at any time and from time to lime, at the
request of anyone now or hereafter liable therefor. Any such extension OJ' release may be
made without notice to any of such persons or entities and without discharging their liability.
8.2
The headings to the viirious sections have been inser1ed l'ol' convenience
of reference only and do not dcllnt:, limit, modify, or expand the express provisions of this
Note.
8.3
Thill Nole is made. with reference lo m1d is l.o be construed in accordance
with the laws of the state or California.
2- PROMJSSORY NOTE
(54 of 387)
ase 2:11-cv-08283-GAF-SP Document 30-3 Filed 04/11/12
Page 1 of 3 Page JD #:634
3
4
5
6
7
UNITED STATES DISTRICT COURT
10
11
12

LIQUIDATING TRUST,
13
14
17
18
23
24
25
26
27
28
May 21, 2012

9:30 a.m.
740
Roybal Fed. Bldg.
255 E. Temple St.
Los Angeles, CA
Judge:
Counterclaimant,
v.
21
22
Date:
Time:
Ctrm:
Location:
Defendant.
19
20
[PROPOSED] ORDER GRANTING

MOTION FOR SANCTIONS
Plaintiff,
v.
15
16
Case No. cv-11-08283 GAF SPx
MARC S. KIRSCHNER, DOES 1 -100,

Counterclaim Defendant.
Hon. Gary. A Fees
(55 of 387)
ase 2:11-cv-08283-GAF-SP Document 30-3 Filed 04/11/12 Page 2 of 3 Page ID #:635
The Motion for Sanctions ("Sanctions Motion") filed by Plaintiff and Counterclaim
2
Defendant Marc S. Kirschner ("Kirschner"), as court-appointed Trustee (the "Trustee") of
the Yellowstone Club Liquidating Trust ("YCLT") came on for hearing in Courtroom 740
of this Court on May 21, 2012 at 9:30 a.m.
the Trustee and
appeared on behalf of
appeared on behalf of Timothy L. Blixseth,
6 Defendant and Counterclaimant herein.

7
8
Upon consideration of the Sanction Motion, opposition and reply papers, review of
the entire record herein, and argument of counsel, and for good cause appearing,
IT IS HEREBY ORDERED THAT:
10
1.
The Trustee's Motion for Sanctions is GRANTED in its entirety.
11
2.
Sanctions shall be imposed against Blixseth and his attorneys ofrecord in the
12
amount of the attorneys' fees and costs of the Trustee incurred in connection with filing
13
this Motion for Sanctions and the simultaneously filed and related Motion to Dismiss.
14
15
3.
The Trustee has fourteen (14) days from the date of this Order to submit a
record of the attorneys' fees and costs as stated herein.
16
17
SO ORDERED.
18
19
20
DATE: _ __
Hon. Gary A. Fees
21
22
23
24
25
26
27
28
[PROPOSED] ORDER GRANTING MOTION FOR SANCTIONS
(56 of 387)
ase 2:11-cv-08283-GAF-SP
Document 30-3 Filed 04/11/12
Page 3 of 3 Page ID #:636
1 Respectfully submitted by,

2
3
4
5
6
Steven Jay Katzman (California Bar No. 132755)

skatzman@bmkattomeys.com
903 Calle Amanecer, Suite 350
Tel: (949) 369-3700/Fax: (949) 369-3701
7 Brian Glasser
8 bglasser@baileyglasser.com
9 209 Capitol Street
10 Charleston, WV 25301
Tel: (304) 340-2282/Fax: (304) 342-1110
11
12 Steven L. Hoard
shoard@mhba.com
13 MULLIN HOARD & BROWN, LLP
14 P. 0. Box 31656
15 Tel: (806) 372-5050/Fax: (806) 372-5086
16
17
18
19
20
21
22
23
24
25
26
27
28
2
[PROPOSED] ORDER GRANTING MOTION FOR SANCTIONS
(57 of 387)
(58 of 387)
Ufa@. 12-35986
0811912013
Michael J. Flynn, Esq.

PO Box 690
Rancho Santa Fe,
CA 92067
tel: 858 775 7624

Robert Huntley, Esq.
815 West Washington St.
PO Box2188
Boise, Idaho 83 702
tel: 208 388 1230
10.8(48363
Philip Stillman, Esq.

l 00 South Point Dr.
Unit TH 15
Miami Beach, FL 33139
tel: 888 235 4279
DktE!illy. 55-2
VitQe. 48 01 295(69 rn 504)
CJ Conant, Esq.
730 Seventeenth St.
Suite 200
Denver, CO 80202
tel: 916 230 3841
James Sabalos, Esq.

2 Via Ravello
Henderson, NV 89011
tel: 949 355 6084
May29,2013
Jack Smith, Esq.
Chief, Public Integrity Section
U.S. Department of Justice
Criminal Division
950 Pennsylvania Avenue, NW
Washington, D.C. 20530
RE:
I. Letter and Memorandum Dated May 4, 2012 Requesting Investigation of
Montana Political and Judicial Commtion; Appointment of Independent
Counsel; Requesting Subpoena for Records of Federal Task Force Career
Investigative Agents.
2. This Supplement Requesting Investigation into the "Targeting" of Timothy L.
Blixseth by State and Federal Agencies, Including the IRS; And the
Preservation of all IRS and DOJ Files Relating to Mr. Blixseth.
3. Request for Immunity for Whistleblower.
Dear Mr. Smith:
Please consider this letter and the documents attached hereto to be a supplemental request
to the Letter and Memorandum we provided to your office approximately one year ago
on May 4, 2012. Those documents are herewith attached again for your convenience.
With the broad scale revelations of "targeting" by the IRS now supported by the
Inspector General, the Public Integrity Section's investigation into Montana political and
judicial corruption, specifically involving the "targeting" of Mr. Blixseth by state and
federal agencies, including the IRS, as demonstrated herein, is both timely and required
by law.
The previously submitted evidence, and the following facts in the context of a chronology
supported by the documentary evidence attached hereto, mandates that the Public
Integrity Section demand, subpoena and reqnest from the IRS and all departments within
Request for Investigation of Montana Bankruptcy Court a1Jd Credit Suisse by Departmellt of Justice,
Public Integrity Section
(59 of 387)
CM@. 12-35986
0811912013
ID. 8148363
Oktb ili y. 55-2
rn 295(JO rn so4J
H:tg&. 4;
the Department of Justice, and all relevant state and federal agencies, all files and
documents relating to the "targeting" of Mr. Blixseth by the Holder I Breuer controlled
Department of Justice and by the IRS. Although Mr. Breuer resigned in February, 2013
as the head of the Criminal Division, and has now returned to the law firm Covington and
Burling, which has represented Credit Suisse throughout all relevant periods involved in
these matters, his previous misconduct relating to the issues involved herein has not been
remedied by the DOJ.
This Supplemental letter also seeks immunity for the whistleblower named in paragraph
25 hereto. To date, Attorney General Holder and Mr. Breuer, have blocked immunity in
order to conceal their participation in the matters recited herein and recited in the May 4,
2012 Letter and Memorandum.
CHRONOLOGICAL STATEMENT OF FACTS
1. September 30, 2005: Credit Suisse loaned $375 million to the Yellowstone Club
("YC") as part of an "Equity Recapitalization" loan scheme to violate FIRREA
and USPAP which was part of a larger, fraudulent scheme involving at least
fifteen "master planned communities." The scheme itself is a derivative of the
securitized mortgage bundling schemes then ravaging the U.S. economy mostly
predicated on fraudulent appraisals without direct connections between the
securitizing banks and the appraisers; but the Credit Suisse loans involve direct
collusion by and between Credit Suisse and its directly commissioned appraiser,
Cushman & Wakefield, to inflate appraisals on the sixteen master planned
communities in violation of FIRREA and USPAP. Credit Suisse attempted to
circumvent FIRREA by issuing the loans through its "Cayman Islands Branch,"
but this part of the scheme failed because the loan documents made the loans
purchasable by federally regulated banks. See generally May 4, 2012 Letter and
Memorandum attached hereto, (Exhibits Omitted).
2. The Credit Suisse created YC loan documents explicitly authorized YC to loan
$209 million of the $375 million loan proceeds to its owner Blixseth Group, Inc.
("BGJ") "without recourse" to Mr. Blixseth, the owner of BGI. For the next three
years, until September, 2008, BGI paid over $40 million in interest to YC
pursuant to duly authorized notes, quarterly KPMO audited financial statements,
and adherence to all corporate protocols. The YC loan and the BG1 loan were
approved by the YC lawyers in writing.
3. On March 13, 2008, Mr. Blixseth culminated a two year divorce battle with Edra
Blixseth pursuant to a comprehensive "Marital Settlement Agreement," ("MSA").
Edra received the YC ($500 million); and Porcupine Creek ($200 million); and
other assets, ($100 million+/-), in appraised assets. Unknown to Tim, Edra had
defrauded banks and lenders of about $50 million during the divorce while
conspiring with Samuel Byrne I Cross Harbor Capital Partners to kill Tim's sale of
YC. Edra gave fabricated Department of Justice "Target Letters" to Byrne to give
to his investors to kill the sale; and then she "borrowed" $35 million from Byrne
Request for Investigation of Montana Bankruptcy Court and Credit Suisse by Department of Justice,
(60 of 387)
CtiM. 12-35986
0811912013
ID. 8148363
OktEltli y. 55-2
Hiye. 48 al 295(/ I bi 504)
with his knowledge that she had defrauded $50 million from the banks. See
documented bank fraud evidence and Byrne loan documents in the May 4, 2012
memorandum. See fabiicated "Target Letters" attached hereto again as Exhibit 1.
Notwithstanding the documented felony violations by Edra Blixseth involving the
fabrication of the DOI "Target Letters" to kill the YC sale as part of hers and
Byrne's scheme to use the Montana Bankruptcy Court to effectively "steal"
hundreds of millions of dollars with the "political capital" and "favors" of
Montana Governor Schweitzer hereinafter recited, Breuer and Holder thwarted
the criminal investigation, which was being conducted by a team of career FBI,
Treasury, and IRS agents; and then used the IRS and the DOJ to "target" Mr.
Blixseth on behalfofBreuer's billionaire friend, Ron Burkle.
4. In July - November, 2008 just before and after the divorce closing, unknown to
Mr. Blixseth, as part of her deal with Byrne, Byrne partnered with Ron
Burkle (Yucaipa Capital controlling a billion dollars of California CALPERS and
CALSTRS Pension funds) in their scheme to put the YC into bankruptcy pursuant
to their "brilliant but evil," "billion dollar" conspiracy to use "political pressure"
involving numerous meetings and large donations to Schweitzer. Edra stated in
one document:
"SB (Byrne) and BS (Schweitzer) have spent enormous political
capital and political favors to ensure they get the right outcome from
the Montana bankruptcy judge." (Exhibit 2, attached hereto)
This scheme enabled Burkle, Byrne and Schweitzer to use Judge Kircher's rulings
and Burkle's connections to Lanny Breuer, for the following purposes:
(a) to target Mr. Blixseth with the Credit Suisse loan (notwithstanding that it is a
"non-recourse" loan);
(b) eliminate Edra's divorce obligations to Mr. Blixseth under the MSA (approx $23 million);
(c) use the Holder I Breuer controlled DOJ to conceal Edra's fake "Target letters"
and bank frauds; terminate a Fed Task Force investigation into their scheme; and
"target" Mr. Blixseth with fabricated civil and criminal claims by state and federal
agencies, including the IRS, the Breuer controlled Criminal Division, and the
Montana Department of Revenue. This cabal of private actors and public officials
accomplished all of the above under the protection of Holder, Breuer and Kirscher
while hacking into Mr. Blixseth's and his lawyers' attorney client privileged
emails, in connection with which the undersigned victims of the email hacking are
requesting immunity for the hacker in order to expose the misconduct of Judge
K.irscher and the criminal conduct of others participating in the scheme. See
Paragraph 25 below. See Exhibit 3 hereto (Byrne email re "brilliant but evil"
"billion dollar" plan); Exhibit 4 (Jan 14, 2009 meeting between Burkle, Byrne and
Schweitzer); Exhibit 5 (Byrne "political pressure" email); See exhibits previously
(61 of 387)
CMe. 12-35986
0811912013
ID. 8148363
DklElilly. 55-2
hiyt!. 49 di 295(12 bi 504)
submitted with attached May 4, 2012 Letter and Memorandum re Burkle

relationship with Breuer whereby Burkle paid millions of dollars to convicted
felon, Anthony Pellicano, now in prison for twelve years, on behalf of the
Clintons during the impeachment proceedings to spy on and illegally collect
alleged evidence against Clinton enemies when Breuer was White House counsel
and dealing directly with Pellicano. The Burkle connection to Byrne also enabled
Byrne to obtain $100 Million from the California pension funds, and more
recently Byrne made a capital call to California for $23 million.
5. In March, 2008, when Edra and Byrne killed the YC sale, Byrne met with
Schweitzer to fonnulate their scheme for the YC bankruptcy before Kirscher. See
Byrne admissions concerning meeting with Schweitzer in testimony attached to
May 4, 2012 Memorandum and exhibits thereto. Schweitzer was up for re election
in 2008 when Byrne and Edra arranged the $35 million Byrne loan in August,
2008 in order to consummate the MSA and, as part of their scheme, to file a bad
faith YC bankruptcy. The chronology of events is telling:
(a) Between July 10, 2008 (four days after Edra announced to YC
members on July 6, 2008 she was taking over the YC out of the
divorce), and September 23, 2008, Burkle, Byrne and Schweitzer
funneled through the Democratic Governor's Association, {"DGA" Schweitzer was then Chainnan) to the Montana Democratic Party,
$1,245,000 by having Byrne and Burkle and their friends and cronies
in the YC scheme, donate said sum to the DGA. The DGA then gave
the money to the Montana Democratic Party who used it in the
Schweitzer reelection campaign. See documents under separate cover
identifying the Burkle and Byrne friends and cronies "donations."
(b) On August 1, 2008, Edra and Byrne agreed on the $35 million loan to
gain control of the YC. See Exhibits to the May 4, 2012
Memorandum.
(c) The next day, on August 2, 2008, Byrne and Edra met with Schweitzer
at the YC to discuss their takeover of the YC. Exhibit 6 attached
hereto.
(d) The next day, on August 3, 2008, the DGA received $750,000 from
the Burkle cabal to give to the Montana Democratic Party. All of these
financial transactions were done in the context of the Burkle I Byrne
scheme to loan $35 million to Edra to secure control of the YC and
then to put the YC into bankruptcy "to ensure they get the right
outcome from the Montana bankruptcy judge." For the $750,000
transaction see documents under separate cover.
This money laundering scheme - having Burkle I Byrne and their friends donate
to the DGA and then to the MT Dem Party, and then to Schweitzer - appears
(62 of 387)
UtM. 12-35988
08/19/2613
ID. 8/48363
DklEriliy. 55-2
Vitg@. 50 di 295(13 di 504)
designed to conceal Burkle and Byrne's financial relationship with Schweitzer

while at the same time Burkle and Byrne were taking over the YC and using their
relationship and "political capital" and "political favors" with Schweitzer to do it.
The illegal purpose of the scheme was to make political donations to corrupt the
bankruptcy judicial process and "steal" the YC, a corruption mechanism routinely
used by Byrne and Burkle - by Byme in bankruptcy proceedings and by Burkle to
obtain control over public funds. See Article "Yucky Yucaipa" and related
publications.
6. After his reelection, in 2009, Schweitzer created two slush funds from the Burkle
I Byrne money, "The Council for a Sustainable America" and The American
Sustainability Project and funneled over $335,000 of the Burkle I Byrne money to
the slush funds. The American Sustainability Project, a 501 (c) (4) organization
was quickly approved by the IRS without examination notwithstanding overt
illegalities in the use of the money and in specific transfers. During the same time
period, in May, 2009, Kirscher issued a series of rulings ultimately giving Byrne
and Burkle over $800 MILLION of Blixseth marital community assets for less
than $10 MILLION; and the IRS, as recited below, began a campaign to target
Mr. Blixseth. For documentation of the slush funds, see documents sent under
separate cover letter. The chronology of bankruptcy co1TUption is recited and
documented in detail in the May 4, 2012 Memorandum and is supplemented as
follows.
7. On Nov. 4, 2008 Schweitzer was reelected. On November 8, 2008, Byrne, Edra
and Burkle put the YC into banl01.1ptcy before Kirscher; and hired Kirscher' s
"best friend," Attorney Patten, who used his relationship to gain access to
Kirscher before the bankruptcy was filed, and to brief Kirscher on the filing. See
email exhibits to Motion to Disqualify Kirscher attached to May 4, 2012
Memorandum. On November 9, 2008, the day after the bankruptcy petition was
filed by Patten, Byrne sent an email to his colleagues stating that they needed to
start using "political pressure" to insure that their "DIP" (Debtor in Possession")
plan would be approved by Kirscher. See Exhibit 5 hereto. The DIP plan gave
Burkle and Byrne control over the banlauptcy. On January 14, 2009, Burkle,
Byrne and Schweitzer met to implement their "political favors" scheme using
Judge Kirscher's connections to the Montana Democratic cabal, and more
specifically his connections with specific lawyers and a specific law firm
representing wealthy members of the YC who were seeking over $20 million
from the proceedings before him. See Exhibit 4. See Immunity Proffer. After
January 14, 2009, all of Kirscher's rulings favored Burkle, Byrne and Edra and
blatantly violated Mr. Blixseth 's substantive and procedural due process rights,
and the rights of other parties involved in the Montana bankruptcy proceedings.
See May 4, 2012 Memorandum.
8. On May 18, 2009, Kirscher approved a "back room deal" after personally
engaging in illegal ex parte meetings in a hotel with Byrne, in which Byrne and
Burkle obtained the YC and other assets for ultimately less than $10M. On that
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date, Kirscher approved an overtly illegal bankruptcy plan creating a "Liquidating

Trust" controlled by Credit Suisse, whose primary purpose was to target Mr.
Blixseth for the "non-recourse" Credit Suisse loan while "exculpating" Edra,
Byrne, Burkle, Credit Suisse from any liability to Mr. Blixseth, or to the YC for
the FIRREA and USPAP violations, (see May 4, 2012 Memorandum and
exhibits) thereby depriving Mr. Blixseth of all of his due process rights and jury
iights to sue and litigate the entire scheme against Burkle, Byrne and Credit
Suisse, with no rights to be heard and in total abrogation of the Federal rules of
Civil Procedure. Such reckless abuse of judicial power has no place in America,
and it is more akin to a country rnled by despots than by a republic. Credit
Suisse, with Judge Kirscher's approval then appointed Marc Kirschner as Trustee
of the Liquidating Trust to sue Tim. The financial connections between
Kirschner, Burkle and Burkle's California bought politicians to control the
California pension funds money to pull off the YC theft with Judge Kirscher are
direct and provable. Kirschner was on the Board of Directors of Spectrum Brands,
59% of which is owned by Harbinger Group Inc. The State of California has over
$330 million invested with Harbinger, and a billion dollars invested with Burkle,
and over $100 million invested with Byrne, all as a result of "political donations."
See documents under separate cover. On April 5, 2011, California schemed with
Kirschner and the Montana Department of Revenue ("MDOR"), to put Mr.
Blixseth into an involuntary bankrnptcy in order to preclude his appeals of
Kirscher's rulings.
The scheme was deterred when an impartial Nevada
bankrnptcy judge saw through it, dismissed the petition on venue grounds, which
the Ninth Circuit reversed. Now, that same judge is hearing Mr. Blixseth's
renewed motion to dismiss MDOR's involuntary petition as well as Mr.
Blixseth's claim for damages against MDOR in June of2013. Recently, in March
- April, 2013, Kirschner's role in this entire cesspool of conuption was exposed
and he either resigned, or his Director position was terminated as a Director of
Spectrum. At the same time, in April, 2013, Kirschner resigned or was removed
as Trnstee of the Liquidating Trust.
9. In June, 2009, just after the Kirscher rulings and blatant violations of Mr.
Blixseth's due process rights, Mr. Blixseth formally requested an FBI I Treasury
and IRS Fed Task Force investigation of the entire matter to be conducted by
career agents not under the control of the Montana Democratic Party and the
Holder I Breuer Democratically controlled DOJ. See May 24, 2012 Memorandum
and Exhibits.
I 0, At some time after the September, 2005 Credit Suisse loan, the IRS had initiated
an audit of BGI for the years 2005, 2006 relating to the loan; but in October,
2009, before the Kirscher rulings on August 16, 2010 relating to Mr. Blixseth's
alleged liability to the Credit Suisse controlled Liquidating Trust and to several
minority shareholders of YC, (see May 4, 2012 Memorandum and exhibits), the
IRS was compelled by the evidence to conclude that the $209 million BGI "loan"
was in fact a loan with "No Change" to the filed tax returns. The IRS' decision
not to issue any changes with respect to BGI's 2005 return was initially made on
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November 2, 2009, agreed to and signed off by Mr. Blixseth on December 8,

2009 and finalized by the IRS on Janua1y 4, 2010. See Exhibit 7 attached hereto,
(IRS January 4, 20 I 0 notification of ''No Change"). However, at the behest of
Kirschner and the Liquidating Trust, notwithstanding the IRS audit results and its
"No Change" January 4, 2010 ruling, on August 16, 2010, and while concealing
his relationships with the attorneys and parties benefitting from his rulings,
Kirscher issued more absurd rulings. See May 4, 2012 letter and Memorandum
and exhibits. See lmmunity Proffer of the whistleblower sent under separate
cover, specifically regarding the misconduct of Judge Kirscher and his
relationships with attorneys and their clients financially benefitting from his
illegal rulings in amounts over $20 MILLION!
11. In early 20 I 0, the Montana political machinery operated by Schweitzer under the
financial influence of Burkle and Byrne then turned directly to the Holder I
Breuer DOJ to directly "target" Mr. Blixseth with a baseless criminal
investigation, and derail the Montana federal career agent investigation of Edra.
At that time, Judge Kirscher was concluding the AP 14 trial in February, 2010 and
preparing his decision. Meanwhile, the senior judge who was aware of the
involvement of the Schweitzer I Burkle political influence, recommended the
continuation of the Edra Blixseth criminal investigation. (See May 4, 2012
Memorandum). Beginning in May, 20 I 0, at the same time Kirscher was elevated
to the BAP - the Montana Democrats were flexing their muscle - Breuer
appointed one of his appointed DOJ attorneys to open a criminal investigation of
Mr. Blixseth allegedly based on a transaction involving property in the Turks and
Caicos which Mr. Blixseth was selling to fund the continuation of his legal
defense. Mr. Blixseth fully cooperated with the DOJ knowing that Breuer was
behind this witch hunt and intimidation campaign to make him drop his legal
defenses in Montana. The internal Montana "enormous political capital" peddling
in the overall scheme became so overt, remarkably, Breuer even appeared in 2011
on nationwide TV to target Tim's foreign purchaser of the Turks property for the
purpose of killing the Turks sale thereby depriving Mr. Blixseth of the funds to
defend himself. In October, 2011, Breuer even had the DOJ file suit and place a
!is pendens on the buyer's property in Malibu to assist in killing the sale. After
achieving this purpose to kill the sale and deprive Mr. Blixseth of funds, the
investigation was abandoned. But Breuer's use of federal agencies to threaten and
intimidate Mr. Blixseth continued.
12. On October 19, 2010, Federal Immigrations, Customs and Enforcement agents
drove from Los Angeles and intercepted Tim's plane at the airport in Them1al,
California while Mr. Blixseth was preparing to depart, (apparently having
wiretapped his phones) and with his pennission, searched the plane. Of course,
there was no basis whatsoever for the search and it was fruitless; but Breuer
succeeded in delivering his message of intimidation. See Exhibit 8, email from
Tim's counsel to, inter alia, the DOJ lawyer appointed by Breuer to conduct the
Turks criminal investigation. No sooner had Mr. Blixseth responded to this
(65 of 387)
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intimidation on Oct. 19, 2010, then the IRS responded with reopened audit
notices. Later, the Coast Guard intercepted Mr. Blixseth's yacht in Los Angeles.
13. While the Breuer controlled DOJ purs'tled its intimidation tactics, Kirscher, with
full knowledge and participation in the Schweitzer I Burkle I Breuer "political
favors" campaign, (see Immunity Proffer) on Aug. 16, 2010 issued his 135 page
"Memorandum of Decision" in AP 14, in favor of the Credit Suisse controlled
Liquidating Trust. This decision was based on Kirscher's previously engineered
"back room deal" which exonerated Edra, and encompassed rulings in favor of his
friei1ds and attorneys in a separate case ("AP 18 ") in which he had not even
afforded Mr. Bli:xseth a trial, while knowing that the career agents in Montana
were investigating Edra (as recommended by a senior judge) and while in
possession of the documents evidencing bank fraud, bankruptcy fraud, destruction
of evidence, obstruction of justice and pe1jury. See May 4, 2012 Memorandum
and exhibits; See Immunity Proffer. In a blatantly absurd ruling, and without
admitting the evidence used by the IRS to approve the "loan", Kirscher ruled that
$209 Million of the Credit Suisse loan proceeds was a taxable shareholder
"distribution" notwithstanding the $40M plus in interest paid by BGI, and the
KPMG approved audited financial statements. Kirscher IGNORED the IRS
approval of the transaction and all of the documentary evidence making it a loan!
Kirscher also ignored hundreds of documents and rejected evidence of the entire
fraudulent scheme. At the same time, the Montana Democratic Party succeeded in
getting Kirscher elevated to the Bankruptcy Appellate Panel.
14. Jn connection with the requested Immunity Proffer under separate cover, Judge
Kirscher's relationships with several Montana attorneys and wealthy Montana
business men who stand to receive over $20 million from his blatantly e1rnneous
rulings in AP 18, which the "judge" entered without even conducting a trial and
herufog evidence on the case, the undersigned respectfully request an expeditious
response to this letter. In the event the Public Integrity Section gives immunity to
a specific witness as requested below, it is expected that additional specific facts
involving Judge Kirscher's and Mr. Breuer's misconduct will be exposed. See
1mnmnity Proffer.
15. After the Kirscher ruling, and under the influence of the Holder I Breuer
controlled DOJ and the Montana Democratic Party, and as part of the Breuer use
of the DOJ in its intimidation campaign, in October, 2010, while Breuer was
having ICE intercept Tim's plane, and pursue the bogus Turks' criminal
investigation, in a dramatic "flip flop" the IRS reopened the BGI audit, and
expanded its audit to Mr. Blixseth's tax returns, after Mr. Blixseth and his
attorneys sent the October, 19, 2010 email - an intimidation tactic Breuer
consistently pursued as Mr. Blixseth resisted the rapidly growing political and
judicial com1ption enveloping his cases. Exhibit 9 (IRS notifications). The
undersigned respectfully request that fue Public Integrity Section specifically
(66 of 387)
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obtain internal DOJ I IRS communications in the context of a chronology reciting

the Breuer intimidation tactics in response to Mr. Blixseth's efforts to obtain
justice in the Montana judicial proceedings.
16. On March 23, 2011, Mr. Blixseth and his counsel met with the IRS and its lead
auditor, Paul Doen-. Mr. Blixseth 's counsel stated that the facts proved,
particularly in light of the demonstrable Montana com1ption and the involvement
of Burkle and Byrne, and Burkle's connection to Breuer, that the reopened audit
was a politically motivated attack from Holder, Breuer and Burkle in order to
crush Mr. Blixseth financially, and to use the IRS to seize Tim's assets, thereby
preventing Mr. Blixseth from challenging on appeal the MT rulings. Counsel
informed Mr. Doen that the Montana Department of Revenue was involved in the
same scheme. Mr. Doerr acknowledged that the "Montana decision" was involved
in the reopened audit but would not disclose any facts involved in the internal IRS
processes, contacts and decision making to "target" Mr. Blixseth.
17. In Aug, 2011, the career agent dominated Fed Task Force sent a Target Letter to
Edra Blixseth. Breuer and Burkle then immediately used their financially
obtained "political capital" to quash the investigation with the complicity of
Breuer.
18. In Sept, 2011, the Fed Task Force was disbanded by Breuer and Holder; the Edra
Blixseth Target Letter was withdrawn and the YC was declared "Off Limits" by
the DOJ. See May 4, 2012 Letter and Memorandum.
19. In September, 2011, at the same time as Breuer quashed the investigation into
Edra, Judge Kirscher blatantly defied the appellate ruling which had overturned
the plan to target Mr. Blixseth and exculpate the others; and re- confinned the
plan to target Mr. Blixseth. See May 4, 2012 Letter and Memorandum.
20. In Oct. 2011, the IRS further expanded the audit. Exhibit I 0 attached. The
Democratic cabal had taken control.
21. On Nov. 15, 2011, five of Tim's representatives met with six IRS officials
including lead auditor Paul Doen-, his boss, Hugo Ramirez, and IRS counsel
Susan Sexton. Tim's counsel explained in detail the facts establishing the
legitimacy of the loan, including over $40 million in interest payments, and
KPMG quarterly audited financial statements documenting the loan; and that
evidence established that the IRS "flip flop," was politically motivated and
pursued based on the Breuer I Burkle I Schweitzer political machinery driving the
audit. Some of the Breuer intimidation tactics were cited. Privately to counsel,
Doerr, apologetically stated words to the effect: " If MT goes away, this audit
goes away."
22. On May 4, 2012, multiple attorneys and victims of the Kirscher I Burkle cabal
filed the Public Integrity Report attached hereto. Four months later, we received
Request for Investigation ofMonlana Bankruptcy Court and Credit Suisse by Department ofJustice,
(67 of 387)
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a letter stating that it had been found in the "Mail Room." This mailing "mishap"
occurred during the height of the Obama reelection campaign. Exhibit 11 attached
hereto.
23. On May 22, 2012, the IRS revoked its previous "No Change" decision regarding
whether taxes were owed for tax year 2005, which turned entirely upon the
characte1ization of the proceeds from the Credit Suisse loan as a loan versus a
distribution. Exhibit 12 attached hereto.
24. On July 2, 2012, the IRS sent a "Notice of Deficiency" of approximately $24
Million for a "loan" it had previously approved as a "loan," not a "shareholder
disttibution." The IRS ruling directly resulted from the Montana political and
judicial corruption which spawned the Kirscher rulings; and from the Holder I
Breuer controlled DOJ use of federal agencies to "target" Mr. Blixseth. Exhibit 13
attached hereto. Although the July 2, 2012 Notice of Deficiency does not contain
any direct citations to Judge Kirscher's findings, the Notice of Proposed
Adjusttnent issued on March 16, 2012 cites extensively from Judge Kirscher's
rnling and relies heavily upon that court's findings. A true and complete copy of
the March 16, 2012 Notice of Proposed Adjustment is attached as Exhibit 14.
Significantly, throughout the time period that Burkle and Byrne schemed to obtain
the YC through Montana bankruptcy proceedings from March, 2008 through the
completion of the scheme in September, 2011 when Judge Kirscher defied the
appellate ruling vacating the illegal bankruptcy plan giving the YC to Burkle and
Byrne, they were hacking into Mr. Blixseth's emailed attorney client privileged
communications. The extent to which the infonnation obtained from these
feloniously procured communications was transmitted to public officials,
including Kirscher, Breuer, the DOJ, the Montana Department of Revenue, and
the IRS, is a substantial basis for granting immunity in connection with the
Immunity Proffer submitted herewith. The politically driven "flip flop" by the
IRS, in the context of the circumstances herein, including the direct involvement
of Mr. Breuer, mandates that the Public Integrity Section grant immunity without
seeking approval from the Holder controlled DOJ.
25. Throughout relevant time periods in this matter, a Whistle Blower on behalf of,
and paid by Edra Blixseth hacked into the computers of Mr. Blixseth and his
counsel. The hacked infonnation was provided to a laundry list of Mr. Blixseth's
"enemies" in a list created by Edra Blixseth. In June, 2012, the Whistle Blower
severed their relationship. The Whistle Blower informed Mr. Blixseth that he and
the DOJ had been hacking into Tim's and Tim's counsel's emails; and he and the
government were wiretapping their phone calls on behalf of Edra and Burkle.
Edra had paid the Whistle Blower over $6.0M to conduct her requested hacking,
at the rate of $100,000 per month from April, 2006 through January, 2009 plus
millions in bonuses. The Whistle Blower and Mr. Blixseth's counsel have been
attempting to secure immunity for the Whistle Blower for the past year to blow
the whistle on this entire matter, but the Holder controlled DOJ has thwarted it at
the risk of exposing their own conupt conduct. (See Immunity Proffer and
Public lntegrity Section
I0
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documents sent under separate cover.) In the event The Public Integrity Section
gives immunity to the Whistle Blower will expose the entire YC scheme, the
misconduct of Judge Kirscher in connection with very specific electronic
evidence, and the criminal conduct of Burkle, Byrne and Schweitzer in their
scheme to use the Montana Bankmptcy Court to perpetrate the "brilliant but evil,
billion dollar plan."
Very Trnly Yours,

Isl Michael J. Flynn
Michael J. Flynn
Isl Philip Stillman

Philip Stillman
Isl Robert Huntlev

Robert Huntley
Isl James Sabalos

James Sabalos
Isl C.J. Conant

CJ Conant
11
(69 of 387)
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FL 320
FOR COURT USE OHL Y
ATTORNEY OR PARTY WITHOUT ATTORNEY (!lamtt, Stole Bar nombor. and ddras}:
Dennnis Holahan
!Law Office of Dennis Hol'ahan
2049 Century Park East

Suite 3180
Los Angeles, CA 90067
TELEPHONE NO.: 707-Q2}-91J6
FAX NO. (OptlonsQ: 707-586-2983
EWJLAOORess (OptJn~11; dholahan@holahanlaw.com
,A,TToRNev FoR (NomoJ: Edra .1;rnxseth
SUPERIOR COURT OF CALIFORNIA, COUNTY OF Riverside
STREET ADDRESS: 4050 Mail Street
MAILING ADDRESS: 4050 .Main Street
CrrY ANO ZIP CODE: Riverside CA 92501-3703
BRANCH NAME: Main Cdurthouse
PETITIONER/PLAINTIFF: Edra Blixseth
RESPONDENT/DEFENDANT:
Timothy Blixseth
OTHER PARTY:
RESPONSIVE DECLARATION TO REQUEST F.OR ORDER

HEARING DATE:
January 14, 2013
TIME:
DEPARTMENT OR ROOM:
8:30A.M.
10
CASE NUM8ER:
R1DIND91152
1.
CHILD CUSTODY
a.
I consent to the order requested.
b. D I do not consent to.the order requested, but I consent to the following order:
2.
CHILD VISITATION (PARENTING TIME)

a. D I consenfto the order requested.
b. D
I do not c~nsent to the order requested, but I co.nserit to the following order:
3.
CHILD SUPPORT
D I cohseht to the order requested,
b. D I cons'ent toguldellne support.
c. D I do no! consent to the order requested, but I consent to the following order:
(1) .D Guh;Jellne
(2) D Other (specify):
a.
4.
SPOUSAL OR PARTNER SUPPORT

a. D I consen! to the order requested.
b. D I donot consent tothe order requested.
c,
I consent to the following order:
p, 1of2
Form Adopte<I for Mandaloiy Uso

Judlclol Council of Callromi
FL-320 (Rov.~uly ~. 20121
RESPONSIVE DECLARATION J.O REQUEST FOR ORDER
(71 of 387)
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FL-320
PETITIONER/PLAINTIFF:
RESPONDENT/DEFENDANT:
Edra Blixscth
cJ\SE NUMBER:
Timothy Blixseth
RIDIND91152
OTHER PARTY:
5.
ATIORNEY'S FEES AND COSTS

I consent to the order requested.
b.
I cjo not consent to the order requested.
c. D
I coilsenno the following order:
a.
6.
D
D
PROPERTY RESTRAINT
a. D
I consent to lhe order requested.
b.
I do not consent to the order requested.
c.
7.
CJ
PROPERTY CONTROL.
D I consent to the order requested.
b. D I donot-cioh~ent to the order requested.
c. D I consent to the fol!owlng order:
a.
8.
LJLl
9.
OTHER RELl,EF
I cons~nt to the order requested.
b. LJLl I do not consent to the order requested.
c. D
a. D
SUPPORTING INFORMATION
Contained in.the attached declaration. (You may use Attached Declaration (form MC-031) for this.purpose},
Memora11dum ofl)oints and Authorities in Oppositi<;>n to Motion for Sanctions and Contempt;
Declaration of Edra Blixseth in Opposition to Motion for Sanctions;
Declaration of Dennis Holahan in .Opposition to Motion for Sanctions
NOTE: To respond to qomestlc viq!ence restraining orders requested In the Requ(Jst for Order (Domestic Violence Prevention)
(form DV-100), you must use the.Answer to Temporary Restraining Order (Domestic Vio/enr;e Prevention) (form DV-120).
I declare under penalty of:pet)\Jry underthe laws of the State of California thatlhe foregoing and all attachments are true and correct.
Date:~. 02 7
b2c3t
Edra Blixseth
(TYPE QR PRINT NAME)
Fl320 !Rev. July 1, 2012]
RESPONSIVE DECLARATION TO REQUEST FOR ORDER
Paga2 of 2
(72 of 387)
1 Dennis I:Iolahan, Esq.(CSB: 057324)

LAW OFFICE OF DENNIS HOLAHAN
2 2049 Century' Park East, Suite3180
Los Angeles, California 90067
3 Tel: (31.0) 286-3344
Fax: (310) 286-2299
4
5
Attorneys for Petitioner

Edra,Blixseth
7
8
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF RIVERSIDE
10
11
In re the Marriage of
By Special Assignment
Dep. 10 ~ Judge Sharon J. Waters
12
13
Case No. RIDIND91152
Petitioner:
Edra Blixseth
16
PETITIONER EDRA BLIXSETH'S

MEMORANDUM OF POINTS AND
AUTHORITIES IN OPPOSITION TO
MOTION OF RESPONDENT TIMOTHY
BLIXSETH FOR SANCTIONS AND TO
SHOW CAUSE RE CONT.EMPT
17
Judge:
and
14
15
Respondent: Timothy L. Blixseth
Date:
Time:
Dept:
18
19
Sharon J, Waters
January 14, 2013
8:30 a.m.
10
[DECLARATIONS OF E"f)RA
BLIXSETH AND DENNIS HOLAHAN
FILED CONCURRENTLY HEREWITH]
20
21
22
23
24
Petitioner Edra.Blixseth (hereinafter "Petitioner") hereby presents her Memorandum of
25
Points and Authorities in Opposition ("Opposition") to Respondent Timothy BHxseth's
26
("Respopdent") Motion for Sanctions and to Show Cause re Contempt.
27
Ill
28
Ill
OPPOSITION TO MOTION FOR SANCTIONS AND"TO SHOW RE CONTEMPT
(73 of 387)
I.
2
JNTRODUCTION ~BACKGROUND
The instant Motion for Sanctions and Contempt ("Motion") filed by Mr. Conant (an
attorney who is not .of record for Respondent in this case) is the latest chapter in what must be
the.longest and most preposterous attempt by an ex-husband to harass and humiliate his ex-
wife. Ajudgement of divorce was entered in this case in October 2008, two years Petitioner
filed the action. Petitioner and most of the companies she received in the stipulated Marital
Settlement. AgreQment ("MSA") were soon in bankruptcy. Respondent Tim Blixseth" on the
other hand, made off with over $100 million in cash and other assets. That wasn't enough for
Respondent, however.
I0
Petitioner received her discharge fr.om bankruptcy in February 2011. She was left with
11
virtually nothing but the goodwill of her-friends and former business associates. She was just
12
starting to get back on her feet when, in July 2011, Respondent hit her with a motion in this
13
case for entry of a $20 million judgment.for payments due under the MSA. But Petitioner's
14
bartkruptcy'Trstee had already filed an action in Montana Bankruptcy Court to set aside that
15
MSA based on mistake, fraud, and fraudulent conveyance. Petitioner therefore filed a Motion
16
to Stay all activity in this casepending theoutcome of the Montana case. On November 16,
17
2011, this Court properly stayeq this aetion: ((he "Stay") pending the outcoine of the adversary
18
proceeding ("Adversary Proceeding")
19
entered in this case; 1 That Adversary Proceeding is. going forward and will come to trial in
20
June 2013. There should be no activity at all in this case until resolution of the Adversary
21
Proceeding.
ii1 Montana Bankruptcy Court to set aside the MSA
22
Now, Respondent has filed, through an attorney not of record in this case, the jnstant
23
Motion claiming that Petitioner and her attorney lied to this Court when they applied for the
24
Stay in August 2011 when they claimed she had no money. Theybase this assertion on many
25
pages of purloined attorney-client communications between Petitioner Edra Blixseth and her
26
current attorney, Mr. Holahan, and between Petitioner and one of her former attorneys,
27
''All proceedings in connection with the marital settlement agreement and judgment in
. this case shallbe stayed pending resolution of the adversary proceeding instituted by the Trustee in the
28 Montana.Bankruptcy action to set aside thMarital settlem.entagreement" Minute Order in this case
dated Nqvember "16, 2011.
OPPQSITION TO.MOTION FOR SANCTIONS AND TO SHOW RE CONTEMPT
(74 of 387)
Deborah.Klar. Ms-. Blixsetli never gave Dennis Montgomery permission to copy these
2 documents off of her computer when he was working for her in 2012, and did not know that he
3 had done so until she saw this Motion.
4
Mr. Conant, who is reputed to be a member of the
California Bar, should know better than to file as exhibits stolen attorney-client
5 communications.
6
Also, in a new low even for this group, Mr. Montgomery has stolen and Mr. Conant has
7 filed- a letter from Edra Blix~eth to Jack Scalia, a man she was having a relationship with after
8 she separated from Respondent in December 2006. There is no reason to do this except to
9 humiliate and embarrass Ms. Blixseth. Mr. Montgomery apparently also took many photos of
10
the interiors ofMs. Blixseth'snew house on December 9, 2011 and those are also filed with the
11
Motion. In addition to an intentional breach of the attorney-client privilege, thjs conquct is, at
12
the very least, an invasion of privacy and theft ofpersonal property.
13
The purpose of all this is to show that, four months after Ms. Blixseth filed a Motion to
14 Stay This Action and objected to Mike Flynn's pro hac vice application, she was doing well in
15
starting new businesses and living in Beverly Hills, and therefore she and her attorney must
16
have been lying when,four months earlier, she stated that she had no money to satisfy the $20
17
million judgment requested by Respondent. There is simply no logic to this reasoning. Even if
18
one tenth ofthestatements about Ms. Blixseth's reputed wealth in December 2011 are true, this
19
has nothin'g to do with her financial condition in July and August of 2011 when she represented
20
to this court that. she had very little. Those statements were true when made, and nothing in the
21
Motion shows the contrary.
22
23
This of course totally ignores the fact that this Court issued the Stay in this case, not
based.on the status of Ms. Blixseth's wealth or lack thereof, but because there is another
24 acti01i pe1tdb1$ in Montana to set aside the MSA which must be decided first.
25
Lastly, and most disturbingly, the documents Mr. Montgomery stole from Ms. Blixseth's
26
computer pa,vebeen significantly altered,. and in at least one case, manufactured out of thin air.
27
Knowingly filing a .falsifie.d document with the Court is, of course, a felony under California
28
Penal Code 115 ("Procuring or offering false or forged instrument for record; violations;
2
OPPOSITfON TO MOTION FOR SANCTIONS AND TO SHOW RE CONTEMPT
(75 of 387)
1 punishment");. People v. Swann 213 Cal.App.2d 447,.28 Cal.Rptr. 830 (1963.) ["adefendant
2
was convicted of eight felony counts of violating section 115 of the Penal Code for knowingly
filing false .documents"].

Why are these people behaving so badly? Who is paying them to behave like this?
4
5
Apparently the new business Ms. Blixseth was attempting to start with Mr. Montgomery in
January- June.2012 did not go well, in spite of promising prototypes, and Ms. Blixseth stopped
raising money for it. Mr. Montgomery (widely reputed to be a con artist and a fraud, and
accused of such by Mike Flynn and the people he now is aiding) now seeks revenge for this
business failure by providing stolen and altered documents and wildly imaginative testimony
10
on behalf of his former employer's ex-husband.

To beclear, Ms. Blixseth, never gave Mr. Montgomery a "thumb drive" with these
11
12
documents on it, she never gaye him pe1mission to copy documents or emails from her
13
computer, she never gave him pem1ission to alter and forge such documents,
14
never gave him pennission to take photographs of the interiors of her home and .give them to
15
her ex~husband's attorneys.
~.nd
she certainly
As for Mr. Conant's ieceipt and use of these documents, California law is clear.
16
17
Studying or using .cibviouslyprivileged documents that belong to another maYconstitute an
18
ethical violation and subject an attorney to sanctions or disqualification. Gomez v. Vernon (9th
19
Cir. 2001) 255 F3d 1118, 1132 (applying federal law); State Comp. Ins. Fundv. WPS, Inc.
20
.(1999) 70 Cal.App.4th 644, 652-654, 82 Cal.Rptr.2d 799, 805-806 (applying:Califomia}aw).
21
Sadly this is not the first time Mr. Blixseth's attorneys have used their opponent'.s attorney-
22
lient privileged communications without permission.

Petitiqner asks this court to see through this sham of a Motion and deny the Respondent
23
24
any relief at all.
25
II.
26
FALSE STATEMENTS IN THt MONTGOMERY DECLARATION.

The accompanying Declarations of Edra Blixseth ("Edra Deel.") a:nd Dennis Holahan
27
("Holahan Deel.") set forth in detail the mi)ny false. statements in the Declaration of Dennis
28
Montgomery ('!Montgomery Deel.") which is the basis for this Motion. TheJeyel of untruth is
3
OPPOSITION TO MOTION FOR SANCTIONS AND TO SHOW RE CONTEMPT
(76 of 387)
fairly wide and.blatant.

2
Briefly, Petitioner has never received $50 to $100 million for any technology developed
by Dennis Montgomery. See Edra Deel. attached hereto,~ 9. Nor was she funneling hundreds
4 ofthousandsof dollars through other companies-into PCI, Inc. to avoid the IRS and.California
5
taxes. Edra Deel., ii 9. Nor did she ever have $250,000 in cash in her house. Edra Deel.,~ 9.
Nor did Edra Blixseth ever give Dennis Montgomery permission to download documents from
her computer. Nor did she "kite" proceeds from furniture sales, or sell antiques twice, or have
a secret deal with CrossHarbor for secret payments, or ask Dennis Montgomery to falsify
documents, or give him pe1mission to photograph her home and then give the .photos to her ex-
10 husband's attorneys. Id.

11
12
III.
THE TRUTH
To the contrary, the truth is that Edra Blixseth filed a Petition for Dissolution of her 23-
13
year marriage to Timothy Blixseth on December 5, 2006. Edra Deel.,~ 2. Edra.acquired an
14
interest in certain high tech intellectual property in early 2006, and incorporated the company
15
OpSpring LLC in March 2006 as a vehicle to own and market said technology. Id.,
iJ 3.
Edra
16 hired Dennis Montgomery as an employee of the newly formed OpSpring, ld.i ~ 3. He was
17
one of th~ developers of this technology. A .dispute arosebetween eTn~ppid Technologies, on
18 the one hand, and Dennis Montgomery; on. the other hand, over the fights to this"techpology,
19
resulting in litigation titled Montgomery v. eTreppid Technologies, United States District Court
20
for the DistrictofNevada, Case No. 06-cv-00056 (PMP VPC) (the "eTreppid Case"). The
21
eTreppid Case was filed in January 2006,. shortly before Edra met Dennis Montgomery and
22
Michaei Flynn in February 2006. In fact, O.pSpring was formed to advance the technologies of
23
Montgomery including an employment contract between Montgomery and OpSpring, which
24
Mike Flynn helpe.d.to draft. All fees and cost of Mike Flynn's legal work we:re then thy
25
responsibility of OpSpring/Edra Blixseth. Id.,
26
ii 3.
Although Edra was not a named party in the eTreppid Case at that time, she undertook
27
the responsibility of paying Flynn and his California partner, Philip H. Stillman, starting in
28
March 2006. Flynn & Stillman had been retained by Edra's employee Dennis Montgomery as
4
OPPOSITION TO MOTION FOR'SANCTIONS AND TO SHOW RE CONTEMPT
(77 of 387)
1 his attorneys in that case. Id.,~ 4. Edra paid legal fees to Flynn & Stillman totaling over $1.2
2
million between .March 2006 and June 2007. Id. Edra filed as Exhibit A to her Opposition to
Flynn~s
from January 2006 through July 2007 submitted to Edra Blixseth and to Dennis Montgomery
and OpSpring, LLC. The statement dated April -May 2007 clearly states: ''TOTAL
PAYMENTS. (Thank You): $1,230,000" on t.he last page of that Exhibit A. Id., ii 4.
Pro Hae Vice Application in this case true copies of statements of Flynn & Stillman
:rt is true that Edra.later stated that Mike Flynn was never her lawyer.
/d.;ij 5. That was
her understanding then because she was not a party to the eTreppid Case at that time. Edra
does not know the specifies of when, under California law, an attorney client relationship is
ii s~.
IO
created. Id.,
11
gave het legal advice on her divorce, even though she did not ask for it, an attorney client
12
relationship was .created under California law. Id., ii 5.
She has since learned that, when she paid Mike Flynn all that money and he
13
After Edra was discharged from bankruptcy in February 2011, one of the. businesses she
14
tried to start was a new technology company with Dennis Montgomery. Id., ii 6. Edra thought
15
he had some good new software. But Dennis Montgomery is his own worst enemy. He has not
16
always been hcmest with people and he has been sanctioned in court several times for .not
17
telling the truth. He also has a gambling problem and he is always in need of cash.
18
Nevertheless :Edra tried to help him. He was in bankruptcy at the time but he formed Pacific
19
Coast Innovations, Inc. ("PCF') to own and nl.arket the technology with other partners who
20
paid him hundreds of thousands of dollars and promised to pay over a million .dollars 'for
21
development of a specific device. Id., ii 6~
22
knew to fund other needs of Dennis, his family, PCI and develop prototypes, and marketing
23
plans. Edra tried very hard to make this a success from December 2011 through June 2102, but
24
the business failed.
25
Montgomery'became desperate. His bankruptcy was dismissed for misconduct on his part
26
around this time, and Mike Flynn, one of Tim Blixseth's attorneys, had sued him for hundreds
27
of thousands of dollars for unpaid fees from the eTreppid Case. Id., ii 6.
28
Id.,~
Edra raised about $200,000 from investors she
6. When Edra stopped funding the PCI in June 2012~ Dennis
During this time Dennis Montgomery started to call Edra to tell her about text messages
5
OPPOSITION TO MOTION FOR SANCTIONSAND TO SHOW RE CONTEMPT
(78 of 387)
and calls he was getting.fromEdra's ex, Tim Blixseth. Id.,~ 7. Tim was apparently offering
Dennis Montgomery money to come over to his side and give Tim evidence to support Tim's
favorite conspiracy theory about Edra - that Sam Byrne and Edra had conspired to sell
Yellowstone Club out of bankruptcy to Sam for one fourth of its true value, and that Edra was
5 somehow geiting paid secret.kickbacks from Sam in her new life. Id.,~ 7. This of course is
6
sheer fantasy and has been adjudicated as such several times in the Montana Bankruptcy cases.
Id.
Part o.f the conspiracy theory posits that Sam Byrne and other wealthy or prominent
8
9
individuals have bribed Judge Ralph Kirschet and Governor Brian Schweitzer in Montana to
Id.,~
10
get favorable rulings in all court proceedings.
11
why Tim would think that Dennis Montgomery would do such things, Dennis Montgomery told
12
Edra that he had done this in the past for Tim during a time when Dennis Montgomery and Edra
13
were not in contact Id. Dennis Montgomery told Edra that he had broken into ihe
14
CrossHarbor (Sam Byrne''s.company)website to allow Tim to gain access. Id.
15
7. When Edra asked Dennis Montgomery
lntP.ese new text messages to Montgomery, Tim was specifically asking for information
16
that would help.him in his court cases in Montana; Idaho and California. He stated that he
17
needed Dennis.Montgomery's type of skills and did not care how Dennis got or created the
18
information. Id. Tim asked for infonnation'that would hurt a variety of people including but
19
not limited to Sam 'Byrne, Governor Schweitzer and Judge Kirscher or his son. Id. Tim told
20
Dennis Montgomery he would help Dennis and his family financially and would stop the
21
attacks or Mike Flynn against Dennis Montgomery if he would help Tim. Now Edra is
22
informed.that Mike F~ynn, one
23
of bankruptcy and given it. back to him.. See .Exhibits B through F to this Opposition.
24
IV:
ofTim~s
attorneys, has bought Dennis Montgomery's home out
FORGED AND ALTERED DOCUMENTS
25
The most troubling problem with the Motion is that Respondent and his attorneys and
26
Dennis Montgomery have knowingly filed altered documents. These documents are listed in
27
paragraph 22 of the Montgomery Declaration. They are attorney client privileged or private
28
and persona!. They were stolen without Edra 's knowledge or permission off.of her frozen
6
OPPOSITION :TO MOTION FOR SANCTIONS AND TO SHOW RE coNTEMPT
(79 of 387)
computer which she gave to Dennis Montgomery to fix. These documents have been altered by
2
Dennis Montgomery, Tim Blixseth or their agents. Attached hereto as Exhibit Al is the
original document titled "Notes on the MSA" with transmittal email which Edra sentto her
attorneys Dennis Holahan and Gary Deschenes on September 20, 2009. Edra Deel.,~ 9 (in
response to paragraph 22 of Montgomery Deel.) Edra created this document for her attorneys'
eyes only in September 2009. She created it on her old desktop computer, the same one she
7 later gave to Dennis Montgomery to fix. in 2012. id. Attached as Exhjbit A-2 is the alleged
8
copy of this document attached to the Motion as Exhibit DM - Exhibit 11. When one compares
9 the last page of both documents, it is apparent that Dennis Montgomery and his.attorneys have
10
added the following language:
11
"Remember we have added help there from the BK Judge who
12
l9ves us, and hates Tim and mike Flynn. At this point they could
13
not get a decent ruling in their favor form that Judge if they tried.
14
Either way,. SB. and BS have things in place in that courtroom to
15
help us. We need to make sure that the validity of the MSA never
16
ends up being decided by.Judge Waters. That would be a nightmare
17
for all of us."
18
The above language, if true, would clearly substantiate Tim's assertions that Edra has arranged
19
for Judge Kirscher to be bribed. But Edra never wrote that language. Id. It has been added.
20
There is further proof. Edra cut and pasted the text of this Word document into an email on the
21
same-day,. September 20, 2009, and sent it to. Dennis Holahan who was in New York that day
22
without a computer so that he could read the text.on his Blackberry. Id. A true copy of that
23
email is attached here as Exhibit A-3. It is clear looking at the last page of the text in the email
24
that the above:quoted language was not in the original document. In addition, language has
25
been added to the letter Edra wrote to Jack Scalia. Id. And the third document, "Holahan MSA
26
Bullett [siC]
27
before.
28
enough basis td go no further and deny the Motion as fraudulent.
Id.
PqJnts''., is completely manufactured.
Edra didn't type it and hasnever seen it
The submission to this Court of clearly altered and forged docu.r'tjents should be
(80 of 387)
1
2
v.
MR. CONANT AND MR. FLYNN'S GIFT TO DENNIS MONTGOMERY.
Up until this month, December 2012, Tim Blixseth and his attorneys Mike Flyrin and C.
3 J. Conant periodically reviled Dennis Montgomery in court filings in Los Angeles and
4
Montana, describing him as a liar, a convicted perjurer and a fraud. Those filings include:
Transcript of Proceedings, January 18, 2011: In this hearing in Butte, Montana, Tim
6 Blixseth.'s attorney Mike Flynn (with Mr. Conant also present) repeatedly accused Dennis
7
Montgomery of fraud: " ... false declarations of Montgomery, which, two months later, his
lawyer had to stand up and admit were false" and referring to Montgomery's technology"the
technology didn't exist and is a complete fraud". Exhibit B to this Opposition.
IO
Adversary Complaint filed by Mike Flynn against Dennis Montgomery on September
11
28, 2009: "Montgomery perjured himself in connection with multiple false statemcntsdn the
12
Nevada cases. , ''. .Exhibit C to this Opposition.
13
14
Deposition of Dennis Montgomery taken by Mr. Conant as attorney for Mike Flynn on
November 18,.2010:
15
Q. (Mr. Flynn):
16
17
18
19
20
21
22
23
24
25
26
27
28
A. (Montgomery):
Isn't it true, Mr. Montgomery, that this, quote, unquote

"decoding software" that you reference on line 22 is a
complete fra4d?
I'm going to assert my right under the Fifth Amendment.
Deposition T:i;anscript of Dennis Montgome1y, excerpts, Exhibit D to this Opposition.

Notice Of Motion fpr Sale in Montgomery bankruptcy. After years of accusing Dennis
Montgomery of fraud and pe1jury, all of a sudden Mike Flynn is trying tb buy l)ennis
Montgomery's $2 million house in Yarrow Point, Washington for a credit:bid plus $20,000 out
ofbankniptcy and is giving the house back to Mr. Montgomery. Exhibit E to' this Opposition.
Declaration in Response to Motion for Sale: Scott Hill, someone else'Who made a bid
on the Yarrow Point house for $1,400,000 in August 2012 is objecting to the Motion.for Sale:
4.
On the afternoon of December 14, 2012, I drove by the Yarrow Point House and
saw the. hedges were trimmed, tha~ there were vehicles in the driveway with. California
license plates, and f!yOple moving int<::; the house. Both garages were open with furniture
and other ite~s visible bei!lg unpacke1. A man who identified hims~lf as. Den,nis
Montgomery mtroduced himself to me and told me that he was movmg back into the
house.
8
(81 of 387)
Declaratio"il of Scott D. Hill, filed in Montgomery Bankruptcy case on December 19, 2012 in
Response to Motion for Sale> Exhibit F to this Opposition.
The above documents seriously call into question any statements madeiri this case by
Dennis Montgomery.
VI.
8
9
ARGUMENT;
A.
The Documents Submitted In Support of This Motion Have Been Altered Or
Are Complete Forgeries - the Motion Should Be Denied On This Basis Alone.
Itl the:.case bf People v.
Wood, 161 Cal.App.2d 24, 325 P.2d 1014 (1958), a defendant
was convicted.of eight felony counts of violating section 115 of the California Penal Code for
10
knowingly filing false documents with the Department of Motor Vehicles. An attorney or
11
unrepresented party who presents a pleading-, motion or similar paper to the court makes an
12
implied "certification" as tci its legal and factual merit; and is subject to sanctions for violation
13
of this certifi9ation. CCP 128.7; see Murphy v. Yale Materials Handling Corp. (1997) 54
14
Cal.App.4th
15
impliedly certifies that "The allegations and. other factual contentions have evidentiary support
16
or> if specifically so identified, are likely to have evidentiary support after a reasonable
17
opportunity for further investigation or discovery." CCP 128.7(b)(3); and "Th~ denials of
18
factual contentions are warranted on the evidence or, if specifically so identified, are reasonably
19
based on a lack of information and belief/' CCP 128.7(b)(4). Violation of any of these
20
certifications may give rise to-sanctions. Eichenbaum v. Alon (2003) 106 Cal.App.4th 967, 976,
21
131Cal.Rptr.2d296,302.
22
619, 623, 62 Cal.Rptr.2d 865, 867. The person presenting the paper to the court
This certification is designed to create an affirmative duty of investigation as to both law
23
and fact, ai:id thus to. deter frivo.Ious action:s and costly meritless maneuvers. BU.Siness Guides,
24
Inc. v; Chromatic Communications Enterprises, Inc. (1991) 498 US 533, 550, 111 S.Ct. 922,
25
929-interpreting Federal Rule 11].
26
27
28
B.
Even.If True, the Documents Submitted To The Court Do Not Prove That
Petitioner Made Any False Statements in August 2011.

Tbe Motion alleges that Petitioner lied to the Court when she stated that she did not have
9
OPPOSITION TO MOTlON FO~ SANCTIONS AND TO SHOW RE CONTEMPT
(82 of 387)
any money to pay a $20 million judgment requested by Respondent. But all of the evidence in
.2
the Motion - the photographs, the money transfers to PCI, the cash deliveries - took place
3 between December 20 I I and June 2012, starting/our mollths after the time period iu
4 question. So even if.all these statements in the Motion are true, they are irrelevant to the issue
5 of whether Pe ti ti oner had enough money in August 20 I I to pay a $20 millionjucigrnent.
6
c.
Inadv.ertent disc1osure during discovery not consent: By its very nature, discovery is
Attorney Client Privilege.
coercion, i.e., "(t)he force oflaw is being brought upon a person to turn over ce1tain
documents." O'Mmy v. Mitsubishi Electronics America, Inc. (1997) 59 Cal. App.4th 563, 577,
10
69 Cal.Rptr.2d 389, 398. Thus, the inadvertent disclosure of confidential infor!Ilation during
II
discovery does not constitute consent to disclosure, and does not result in waiver of the
I2
privilege. Regents of Univ. of Calif. v. Sup. Ct. (Aquila Merchant Services, Inc), supra, I 65
13
Cal.App.4th at 678-680, 8I Cal.Rptr.3dat 190-192; O'Mary v. Mitsubishi Electrontcs
I4
America, Jnc., ..rnpra, 59 Cal.App.4th at 577, 69 Cal.Rptr.2d at 398-399 ["Inadvertent
IS
disclosur~ .during discovery by no stretch of the imagination shows consent to the disclosure"];
I6
State C.omp. .lns.. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644, 654, 82 Cal.Rptr;2d 799,
I7
805-806; see.also ABA Model Rule 4.4(b), Comment (2).
18
Studying or using obviously privileged documents that belong to. another may constitute
19
an eth~cal violation and subject you to s~mct!ons or disqualification. Gomez v. Vernon (9th Cir.
20
2001) 255 F3d .ll 18, 1 l32 (applying federal law); State Comp. Ins. Fund v. WPS, Inc. (1999)
21
70 Cal.App.4th 644, 652-654, 82 Cal.Rptr.2d 799, 805~806 (applying California law).
22
23
The above authorities are clear. No documents obtained by Dennis Montgomery from
Edra Blixseth's computer should have been- submitted to this Court.
Petitioner requests that Exhibits A-1, A-2 and A-3, which are attorney client
24
25
communi~ations (albeit with
26
without waiving the attorney client privilege, which Petitioner wishes to preserve.
27
Ill
28
Iii
A-2 altered by Respondent) be submitted for perusal by the Court
JO
OPPOSITION TO MOTION FOR SANCTIONS AND TO snow RE CONTEMPT
(83 of 387)
VII.
2
3
CONCLUSION.
For all the above reasons, Petitionerrequests that this Motion for Sanctions and
Contempt be denied it its entirety.
4
Dated: December 27, 2012
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
11
(84 of 387)
Ufae. 12-35986
0811912013
ID. 8148363
DktEl1uy. 55-2
DECLARATION OF
EDRA BLIXSETH
ViiQe. 112 oi 2(5'.35 oi 504)
(85 of 387)
DECLARATION OF EDRA BLIXSETH

2
I, Edra Blixseth, declare and say:

I am the Petitioner in this action for Petitioner Edra Blixseth ("Petitioner"), and
am familiar with the facts and pleadings in this case. I make this Declaration fn.connection
with Petitioner's Opposition to Respondent's Motfon for Sanctions and for Contempt. If called
as a witness, I could and would testify to the matters set forth herein based upon my personal
knowledge.
8
9
IO
2..
I filed a Petition. for Dissolution of my 23 year marriage to Timothy Blix.seth on
December 5, 2006.
3.
I acquired an interest in certain high tech intellectual property in early 2006, and
11
incorporated the company OpSpring LLC in March 2006 as a vehicle to own and market said
12
technology. I hired Dennis Montgomery as an employee of the newly formed OpSpri.ng.
13
was orie ofthe developers of this technology. A dispute arose between eTreppid Technologies,
14
on the One hand, arid Dennis Montgomery; on the other hand, over the rights to this technology,
15
resulting in
16
for the District of Nevada, Case No. 06-cv-00056 (PMP VPC) (the "eTreppid Case").
17
eTreppid Case was filed in January 2006,. shortly before I met Dennis Montgomery and Michael
18
Flynn in February 2006. In. fact, OpSpring was f01med to advance the technologies of
liti~ation
He
titled Montgomery v. eTreppid Technologies, United States District Court

T~e
19 Montgomery including an employment contract between Montgomery and OpSpring, which

20
Mike Flynn helped to draft. All fees and cost of Mike Flynn's legal work were then the
21
responsibility of OpSpring1Edra Blixseth.
22
4.
Although I was not a named party in the eTreppid Case at that.tin;ie, I undertook
23
the responsibility of paying Flynn and his California partner, Philip H. Stillman, starting in
24
March 2006. Flynn & Stillman had been retained by my employee Dennis Montgomery as his
25
attorn~ys in th~t ci:i.se. I paid legal fees to
26
March.2006 and June 2007. I filed as Exhibit.A to my Opposition to Flynn'~ Pro Hae Vice
Flynn & Stillman totaling over $1.2 million between
27 Application in this case true copies of statements of Flynn & Stillman from J~ary 2006
28 through July 2007 submitted to:me, Edra Blixseth, and to Dennis Montgomery and OpSpring,
OPPOSlTIONTO MOTION }?OR SANCTIONS. AND TO SHOW RE CONTEMPT
(86 of 387)
1 LLC. The statement dated April -May 2007 clearly states: "TOTAL PAYMENTS (Thank
2
You):
$1,230~000"
5.
on the last page of that Exhibit A.
It is true that I later stated that Mike Flynn was never my lawyei'. That was my
understanding then because I was not a party to the eTreppid Case at that time. I am not a
lawyer. I do not know the specifics of when, under California law, an attorney client
relationship is created. I have since learned that, when I paid Mike Flynn all that money and he
gave me leg&! advice on my divorce, even though I did not ask for it, an attorney client
relationship was created under California law. That is why I objected to bis Pro Hae Vice
Applic~tion
10
11
6.
in this case.
I would object to it again on the same grounds if he tries it.again.
After I was discharged from bankruptcy in Febrnary 2011, one of the businesses I
tried to start was a new technology company with Dennis Montgomery. I thought he had some
12 .good new software. But Dennis Montgomery is his own worst enemy. He has not always been
13
honest with people and he has been sanctioned in court several times for not telling the truth.
14 He also .Ms a gambling problem and he is.always in need of cash. Nevertheless I tried to help
15
him. He was in bankmptcy at the time but he formed Pacific Coast Inn.ovatibi1$; Inc. ("PCI")
16 to own and maf~et the technology with other partners who paid him hundreds of thousands of
17
doUars and proriliSed to pay over a million for development of a specific device. I raised about
18
$200,000 from investors I.knew to fund, other needs of Dennis, his family, PCI and develop
19
prototypes? and :marketing plans. I tried very hard to make this a success from December 2011
20
through June 2 I 02, bu:t the business failed. When .I stopped funding the PCI in June 2012,
21
Dennis Montgoinery became 9,esperate. His bankruptcywas dismissed for mi$conduct on his
22
pa1t around thistime, and Mike Flynn, one of Tim Blixseth's attorneys, had sued him for
23
hundreds of thousands of dollars for unpaid fees from the eTreppid Case.
24
7.
Du.ting this time Dennis Montgomery started to call me to tell me about text
25
messages and calls he was geWng from my ex, Tim Blixseth. Tim was apparently offering
26
Dennis Montgomery money to come over to his.side and give Tim evidence to suppo.rt Tim's
27
favorite conspiracy theoryabout me - that Sam Byrne and I had conspired to sell Yellowstone
28
Club out of bankruptcy to Sam for one fourth of its true value, and that I was somehow getting
2
OPP.OSJTION TO MOTTON FOR SANCTIONS' AND TO SHOW RE CONTEMPT
(87 of 387)
paid secret.kickbacks from Sam in my new life. This of course is sheer fantasy-and has been
2
adjudicated as such several times in the Montana Bankruptcy cases. Nevertheless, Tim cannot
let go of it Until these latest filings from Tim, I thought he must really believe what he was
asserting. Now after seeing the blatant lies and false/modified documents, I know tha:t Tim just
5 wants to harm n1e and others at all cost. Part of the conspiracy theory posits that Sam Byrne
6 and other wealthy or prominent individuals have bribed Judge Ralph Kirscher and Governor
7 Brian Schweitzer in Montana to get favorable rulings in all court proceedings. When.I asked
8 Dennis Montgomery why Tim would think that Dennis Montgomery would dosuch things,
9 Dennis Montgomery told rne that he had done this in the past for Tim during atime when
I 0 Dennis Montgomery and I were not in contact. Dennis Montgomery told me that he h~d broken
11
into the CrossHarbor (Sam Byrne's company) website to allow Tim to gain access. In these
12
new texts, Tim was specifit,ally asking fot information that would help him in his cou1t cases in
13
Montana, Idaho and California. He stated that.he needed Dennis Montgomery's ty'pe ofskills
14
and did not care how Dennis got or created. the information. Tim asked for information that
15
would hurt a :variety of people including but not limited to Sam Byrne, Governor Schweitzer
16
and Judge Kirscher or his son. Tim told, Dennis M6!ltgomery he would help Dennis and. his
17
fam:ily financially and would stop the attacks of Mike Flynn against Dennis Montgomery if he
18
would.help.1:-itn. Now I am informed that Mike Flynn, one of Tim's attorneys, has bought
19
Dennis Montgomery's home out of bankruptcy a:nd given it back to him.
20
8.
So now, six months after I stopped funding his technology, Dennis Montgomery
21
bas filed a declaration against me in this Motion for Sanctions. It is ironic that Tim Blixseth
22
and his lawyer Mike Flynn I:iave accusep Dennis Montgomery of forging FBI target letters
23
against Tim in the past,. and now they are using him in this case, and he has, finally and
24
irrefutably, filed a forged and altered document in this case.
My response to Dennis Montgomery'-s declaration is as follows:
25
9.
26
Paragraph 1:
These statements are true.
27
Paragraph 2:
28
3
(88 of 387)
Paragraph 3:
These statements:.are partly true and partly false. We were not
"looking for a large initiai payment" because of past investment into technology. In fact, the
first project t~ey were interested in doing was not a large amount. There was, never a talk of 50
to 100 million dollars, and I never received any such amounts for any of the technology, ever.
Those numbers were whatDennis Montgomery and Mike Flynn told me Dennis had in. pending
contracts when 'i first met them in Februa1y of 2006. We did talk about having any contract we
might be able to secure, to be with a third party, but not for the reasons that Dennis states. That
is the only way anyone within any departr,rient of the government would work with us because
of Dennis Montgomery's own reputation from past dealings.
They stated to me.and others that
10
Dennis Montgomery was considered blacklisted. It is ironic that I was one of the few people
11
that believed in Dennis Montgomery and still' was willing to try and promote his work. I spent
12
much of my time having to argue and defend Dennis Montgomery and his work. But, when I
13
was unable to get any of his work placed with a contract, get an investor or personally support
14 him, he then tmed on me l*e so many.had warned me about, but I sadly did not believe them.
15
The custorners 'that Dennis Montgomery refers to in his statement simply stopped
16
communications with both Dennis and me. Itold Dennis Montgomery I would not bring in
17
another investor and would only work to try to place .the technology in activecompanies. I did
18
not stop communications with Dennis Montgomery until his communications to mechanged
19
and it was clear he was working with Tim Blixseth and Mike Flynn.
20
21
Paragraph 4:
or paid anybody;
these statements are completely false. I bave never asked anybody,
to hack int.o anyone's computer.
Dennis'Montgomeryhas offered to do that
22 for me, because he claims he knows how to hack into computers, but I.refused those illegal
23
activities. He ..did tell me that he had done that for Tim in the past and the textsbetween them
24
a.ddress this.
25
26
Paragraph 5:
These statements are.true completely false. After I was discharged
form bankruptcy in February 2011, I "went underground" to the extent that I did not want to
27 open a bank.account in my name because I believed that my ex, Tim Blixseth, would. try to
28
seize my money because I owed 'him payments under the MSA that could not be discharged in
4
(89 of 387)
bankruptcy. And in fact that is what he tried to do in July 2011. I have also wanted to protect
2
others from Tim's wrath. Anyone that has involvement with me, becomes a target to hitn.
Because of my background and history, Discovery Land, employed me at times and Sam
Byrne's compai)'ypaid me a commission for antiques I helped them market at the Red Baron
auction })ose in Atlanta. I was the most quafi:fied to handle this because of my knowledge in
purchasing all of them. These were antiques that I used to own when I lived ,at Porcupine Creek
which I lost through bankruptcy. Sometimes l instmcted these people to pay the. money they
owed me to. Dennis Ho.laban for his services rendered. I was not trying to avoid the IRS and
the State of California. I am in communications with the IRS and have personally met with
10
them on more then one occasion. I recently filed tax returns for 2011, and I plal:l to file tax
11
returns for 2012, declaring all this income.
12
Paragraph 6:
The.se statements are completely false. I never.owned FF&E
It wasnot a "front" to move money true. Dennis Holahan did nqt operate FF&E
13
Liquidators.
14
and never made,cash deposits into FF&E.
15
Paragraph 7:
This statement is false. Since I did not have a bank.account, Dennis
16
Holahan- cashed checks for me, usually for a little over $5000 a month, from Shared Staffing
17
Services, LLC~ I was also reimbursed for Olivia Scalia's salary while she was helping with the
18
disposal O.f Porcupine Creek inventory.
19
Paragraph 8:
ln November of 2011, the investor that Dennis Montgomery had
20
obtained who was funding PCI stopped paying. Dennis Montgomery told me itwas.just a
21
confusion that would be cleared up between them. He showed me the contracthe had with
22
them a.nd ~t seenjedreal. They had a:lreadygiven Dennis Montgomery a greahiealofmoney
23
and I had no rea.son to believe that they would not continue to do so once the l:ss.ues were
24
resolved". In becember of 2'011, the investor:s that I had brought in could no.t continue to invest.
25
We had started talks with a third party that appeared would bring in a contract that would
26
include funds to at least support the overhead. I personally had some funds Set aside for my
27
living expenses. In D.ecember 2011 Dennis Montgomery said that he and his family had no
28
money for Christmas and I gave them what I could but I had to have it rightback when he got
s
-OPPOSJTION TO MOTION FOR.SANCTIONS AND TO SHOW RE CONTEMPT
(90 of 387)
the. PCI funds. I told Dennis Montgomery that I could cover some of the nee~fa right then, but I
2
had to have the funds back, as it was all I had to live on. He assured me he wp'l,lld pay it right
back and seemingly continued to work to resolve the issues he was having with the PCI
investor. I seemed to be making great progress with this new company and everyone felt we
would be getting a contract in a short time. As more and more weeks went by and my funds
were down to almost nothing, we laid everyone off and then closed the office .. There were
times that I gave Dennis Montgomery all the money I had. He would tell me that he or
someone in his'farn.ily was ill artd could not get his medications. On several occasions his
daughter or
son~in-law would
text me asking for help as well. On one occasiO.ri; I gave them
10
around $500.00, which was all the money I.had, so their son could get into a school they wanted
11
him in. All of this time, we were all simpiytrying to get by until a contract came through or the
12
PCI investor was back. By June 2012 it was clear that neither were going to happen.
Paragraph 9:
13
These statements are partly true. I certainly paid for PCI's electric
14
bi"ll any way that.I could. I generallypaidfor PCJ's expenses because that was why !"raised
15
money to operate the company, in hopes of generating sales. This was an office space that
16
Dennis 's hwes.tor had been .paying for and I was told would continue again. I did not run any
17
business out of the PCI office other then meetings for the technology.
P.aragraph IO:
18
These statements are false, and this is the cover for Dennis
19
Montgomery stealing my documents. I never shared office space with Dennis Montgomery.
20
have always just come and gone from any office where he has done business. I ,have left-my lap
21
top in the conference room,. which is where I would set up at that office, while going to Junch,
22
but NEYER told anyone that they could take information off of my computer. I. never gave
23
])ennis
24
it, becauseit was frozen, but I-never authorized him to copy, print, download.orreprqduce in
25
any way any of the documents on that computer.
26
Mon~gomery.any
Paragraph 11:
thumb drives. I gave him one desk-top computer to see if he could fix
These statements are partly true and partly false. Both Tim Blixseth
27
and Mike Flynn. had been responsible for much press, legal efforts and heartache to both Dennis
28
Montgomery and myself. There were times that we both let each other know what was going
OPPOSITION TO MOTION FOR .SANCTIONS AND TO SHOW RE CONTEMPT
(91 of 387)
on in our legal cases so we knew what Tim and Mike were up to regarding their attacks on both
2
Dennis Montgomery and myself.
Paragraph 12:
Paragraph 13:
The statement is true that Dennis Montgomery was at the
5 townhouse I was living in fot meetings with the investors or to prep~e for meetings. But I
6
never authorized him to take pictures .nor gave him pe1mission to then publi~h the photographs.
Besidestheviolation of my privacy, he is wrong about his assumptions regarding ownership of
items and why they were there. As an example, theChristmas decor was used out of the
warehouse for that year as my daughter and her family were traveling from Sweden to spend the
10
holiday's with me. I was excited to have them and had asked if I could use some of the decor to
11
make their visit' more festive. After they left, the decor was returned to the warehouse. There
12
were many items there that I was trying to sell as part 'Of my agreement for attempting to get the
13
best prices.
14
Paragraph 14:
These statements are completely false. I never had $250;000 in
15 cash in 1:hy home or anywhere else, and I certainly never .gave three envelopes of $15,000 each
16 to Dennis Montgomery.
17
Paragraph 15:
These statementsare completely false.
18
Paragraph 16;
These statements are completely false.
19
Paragraph 17:
20
Paragraph 18:
These statements are true and false. Olivia Scalia and Matth.ew
21
Ctocke{have helped me with the inventory sells. I never made the statements about .O'Neils
22
storage not being in my name for the reasons he states. CrossHarbor found O'Neils storage
23
well before having me involved with the project. It is their inventory, not mine;. The first time I
24
even saw the warehouse, everything had been there for months. I met with tj employee of
25
CrossHarbor at the warehouse to determine what would need to be done in order to sell the
26
inventory.
27
28
Paragraph 19:
These statements are completely false. Further, Dennis
Montgomery is the first one who ever told me that Mike Flynn's invoices to me wou,id in fact
7
OPPOSITION TO MOTION FOR SANCTIONS AND'TO SHOW RE CONTEMPT
(92 of 387)
legally make him my lawyer, regardless of what I had said. I then contacted my own lawyer
and asked their opinion. Dennis Montgomery is the one that put together a website that had all
of Mike Flynn's billings on it for my lawyer to access and review. Montgomery wrote a
chronological list of all or"Mike Flynn's activities over the past years from when Dennis
Montgomery introduced me to Mike Flynn up to the present.
Paragraph 20:
These statements are true. I sent these emails. But I never gave
7 Montgomery permission. to 4ownload thei:n or copy them. In addition, they are attorney client
8 commm1ications and privileged, which.Mr. Conant must have known when he ~aw them. It is
9
true that l stated that Mike Flynn was never my lawyer. That was my understanding then
1O because I was not a party to the eTreppid Case at that time. I am not a lawyer. I do not know
11
the specifics of when, under California law, an attorney client relationship is created. I have
12
since learned that, when I paid Mike Flynn all that money and he gave me .legal advice on my
13
divorce, even though I did not ask for iti an attorney-client relationship was created under
14
California Jaw.
15
Paragraph 21:
I have no idea if this is true or not.
16
Paragraph 22:
These documents are attorney client or private and personal. They
17
were stolen without my knowledge or permission off of my frozen computer which I .gave to
18
Dennis Montgomery to fix. Thesedocuments have been altered by Dennis Montgomery, Tim
19
Blixseth or their.agents. Attached hereto as Exhibit Al is the original doc1ui;lent titled "Notes
20
on the MSA;' with transmittal email which I sent to my attorneys Dennis Holahan andOary
21
Deschenes 'on September 20; 2009. I created this document for my attorneys'' eyes only in
22
September 2009. I created i.t on my old .desktop computer, the same one I late1 gaveto Dennis
23
Montgomery to-fix in 2012. Attached as Exhibit A-2 is the alleged copy of This document
24
attached to the Motion as Exhibit DM - Exhibit 11. When you compare the last page of both
25
documents, it is apparent that Dennis Montgomery and his attorneys have added the following
26
language:
27
"Remember we have added help there from the BK Judge who
28
loves us, and . hates Tim and mike Flynn. At this point they could
8
OPPOSITION TO MOTION FOR. SANCTIONS AND TO SHOW RE CONTEMPT
(93 of 387)
not get a decent ruling in their favor form that Judge if they tried.
Either way, SB and BS have things in place in that courtroom to
heJp us. We need to make sure that the validity of the MSA never
ends up beingdecided.by Judge Waters. That would be a nightmare
for all of us."
I never wrote that language. It has been added. In proof of this, I cut and pasted the text of this
Word docume.nt into an email on the same day, September 20, 2009, and sentit to Dennis
Holahan who was in New York that day without a computer so that he could read the text on
his Blackberry. A true copy-of the email is attached here as Exhibit A-3. Itis clear looking at
10
the last page ofthe text in the email that the above quoted language was not in the original
11
document. In adciition, language has been added to the letter I wrote to Jack $calia. Anti the
12
third document, "Holahan MSA Bullet [sic] Points", is completely manufactured. I didn't type
13
it and I have never seen it before.
14
15
16
Paragraph 23:
Tpese statements are false. The statement at the top was not written
my me. The handwriting below MBR is mine.

Paragraph 24:
17
18
ro.
19
Paragraph 1:
20
Parag1~aph
2:
This is false.
21
Paragraph 3:
This is false.
22
Paragraph 4:
This is false.
23
Paragraph 5:
This is false.
24
Paragraph 6:
This is false.
25
Paragraph 7:
This is partly true and partly false. Tim wou1d have some
My respons~ to Tim Blixseth's declaration is as follows:
I have no way of knowing if this is true.
26
knowledge of items that were at Porcupine Creek. He might even recall some of the.purchase
27
prices. Thos~ are not the satne "value" in today's market and when you are selling it~ms.
28
There has been nothing recently sold with a value of "hundreds of thousandsi..if.not millions of
9
OPPOSITION TO MOTION FOR SANCTIONS.AND TO SHOW RE CONTEMPT
(94 of 387)
1 dollars." Tim and his lawyers have repeatedly attempted to hann the sale of these items. They
2
did the same when I was attempting to help with selling Yellowstone Club inventory. They
have tqld prospective buyers that if they buy something, it will get tied up in legal ownership
issues. They have gone so far as to send people to bid on things and then not pay for them.
5 Recently, his lawyer called to tell the owner of the Red Baron auction house that they had a lien
6 on my jewelry and that Tim recognized the jewelry in the ads for the auction. They ajtempted
7
to try to stop the sal~. But they were wrong. I had no jewelry at the sale for either myself
personally nor CrossHarbor.
Paragraph 8:
I .have no way of knowing if this is true.
IO
Paragraph 9:
This is false.
11
12
J declare under penalty of perjury under the laws of California that the foregoing is true
13
and correct,. and that this declaration was executed on December 26, 2012 in Los Angeles,
14
California.
15
Edra Blixseth
16
17
18
19
20
21
22
23
24
25
26
27
28
10
OPPOSITION.TO MOTION FOR SANCTIONS AND TO SHOW RE CONTEMPT
(95 of 387)
Case. 12-35986
08/1972013
ID. 8148363
DktElilry. 55-2
DECLARATION OF
DENNIS HOLAHAN
Plige. 123 bi 2{546 al 564)
(96 of 387)
DECLARATION OF DENNIS HOLAHAN

2
I, Dennis Holahan, declare and say:
1,
I am the attorney of record in this action for Petitioner Edra Blixseth
("Petitioner"), and am familiar with the facts and pleadings in this case. I make this
Declaration in connection with Petitioner's Opposition to Respondent's Motion for Sanctions
6 and for Contempt. If called as a witness, I could and would testify to the matters set forth
7 herein .based upon. my personal knowledge.
My response to Dennis Montgomery's declaration is as follows:
2.
Paragraph 5:
These statements about me are false. I never "funneled" money to
10
Edra Blixseth in order to avoid the IRS or California tax authorities. Upon occasion I cashed
11
checks for her because she had no bank accounts.
12
Paragraph 6:
These statements about.me are false. I did focorporate FF&E
13
Liquidators, Inc. for Ms. Blixseth, but Inever had anything to do with its operations, and I
14
never ma:de any cash depm(its.into its accounts.
15
Paragraph 7:
These statements about me are false. I cashed one check for Ms.
16
Blixseth for approximately $9,000 on September 2, 2011 for two months of secretarial services
17
for her secretary;
18
19
20
21
Paragraph 8:
These statements about me are false. I once wired $4,000 from
money in my trust account to PCI on February 2, 2012 to cover start up costs.
Paragraph 14:
These statements about me are false. I never gave Ms. Bl.ixseth
envelopes with $250,000 in cash, or any amount close to that.
22
Paragraph 17:
These statements about me are false.
23
Paragraph 22:
The documents attached are either forged or altere4.
24
3.
25
Exh!. A-1 ~
Attached hereto are true copies of the following documents:
Blixseth on September ~O, 2009;
26
27
28
I received this email. and the attached "Notes on the MSA'~ from.Edra
Exh. A-2
This is the alleged copy of the "Notes on the MSA" attached to the Motion
as Ex.hibit DM - Exhibit 11.
OPPQSITION 'l'O MOTION FOR SANCTIONS AND TO SHOW RE CONTEMPT
(97 of 387)
Exh. A-3:
I received this email on September 20, 2009, from Edra Blixseth. She had
cut and pasted the text of "Notes on the MSA" into an email on the same
day, September 20,.2009, and sent it to me in New York that day where I
was without a computer so that I could read the text on my Blackberry.
Petitioner requests that Exhibits A-1, A-2 and A-3, which are attorney
NOTE:
client communications (albeit with A-2 altered by Respondent) be
submitted for perusal by the Court without waiving the attorney client
privilege, which Petitfoner wishes to preserve.
Exhibit B:
Transcript of Proceedings, January 18, 2011: In this h~aring in Butte,
10
Montana, Tim Blixseth's attorney Mike Flynn (with Mr. Conant also
11
present) repeatedlyacclised Dennis Montgomery of fraud: " ... false
12
declarations of Montgoi,11ery, which, two months later, his lawyer had to
13
stand up and admit were false" and referring to Montgomery's technology
14
"the technology didn't exist and is a complete fraud" ..
15
Exhibit C:
Adversary Complaint filed by Mike Flynn against Dennis Montgomery
16
on Septeniber28, 2009: "Montgornery p(1.rjured himself in connection with
17
multiple false statements in the Nevada cases .. ".
18
Exhibit D:
Mike Flynn on Novemper 18, 2010:
19
20
Depositio1i of Dennis Montgome.ry taken by Mr. Conai:i~ as attorney for
Q. {Mr; Fly:hn):
21
22
A. (Montgomery):
23
Ex"hibit E:
Isn't it.~rue, !11r Montgomery; that this, quo~e, unq!lote

"decodmg spftware" that you reference on !me 22 1s a
complete fraud?
I'm going to assert my right under the Fifth Ameridmei1t.
Notice of Motion for Sale in Montgomery bankruptcy. After years of
24
accusing Dennis Montgomery of fraud and perjury, all of a sudden Mike
25
Flynn is trying to buy Dennis Montgomery's $2 million house in Yarrow
26
Point, Washington for a credit bid plus $20,000 out ofbank.rqptcy and is
27
giving the house back to Mr. Montgomery. Who is Mike Flynn's lawyer
28
2
(98 of 387)
for this deal? Mr. Conant. The Unilateral Status Report filed by Mr.
Conant is attached as part of this Exhibit E.
Exhibit F:
Declaration in Response to Motion for Sale: Scott Hill, someone else
who made a bid on the Yarrow Point house for $1,400,000 in August 2012
is objecting to the Motion for Sale:
4.
On the afternoon of December 14, 2012, I drove bythe
Yarrow Point House anci saw the hedges were trimmed, that there were
ye)lides in the dpveway with California li_cense_p.lates, and peop!e:moving
mto the house. Both garages were open with furniture and other items
visible being unpacked. A man who. identified .himself as Dennis
Montgomery introduced himself to me and told me that he was moving
back mto the house.
7
8
9
10
11
I declare under penalty of perjury under the laws of alifornia that the foregoing is true
12
and correct, and that this declara
13
California.
26, 2012 in Santa Rosa,
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
3
(99 of 387)
Case. 12-35986
0811912013
ID. 8148363
bklt:tilry. 55-2
EXHIBIT A-1
Page. 12 I di 2{550 oi 504)
(100 of 387)
Case. 12-35986
0811972013
10.8148363
Oktb IU y. 55-2
Paye. 128 di 2\S:Si al 504)
Dennis Holahan
From:
Sent:
To:
Subject:
Attachments:
LearG2@aql.yon:i
Su_nday, ~eptember .20, 2009 :2:29 PM
gsd@dslawoffices.net; gary@dslawoffices.net; dholahan@holahanlaw.com
my notes on the msa
Notes on the MSA.doc
Gary and Dennis As Dave requested, I am sending this to you first. I told them I would have It to you tOday, s9 that I
hoped you could read arn;J then forward to th.em by tomorrow morning. Okay, remember that I had to type this in
myself.......... ,.so over IOQk typ_o:s and words. that you know:whcit I mean, okay? Let me know if you have any questions.
was thinking of sending io trqy, since they were part of the other trail and had been looking at the MSA. Edra
This message and any atlached documen1smay be"conrldenlial, privileged or boih."11 you.are nol lhe lnte~ded recipient, you are nol authorimd to open, read,
copy, store, dislribule or use lhls lnfor(llallon in any way. Failure lo comply wilh this nolice may be a vlolaUon of eppHciible laws concerning.the recelpt'oi. electronic
mall. If you have received lhls transmission in error, please nolifythe sender immedialely by replying lo this e-mail and then deletethis message. Thank you.
No virus found in this. message.

Checked byAVG -www.avg.com
Version: 2012.0.. 1901 /Virus Database: 2637/5475-Release Date: 12/20/-12
No virus fo1,1ri.d in this incoming fOE!~sag~.
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(101 of 387)
Case. 12-35986
0811912013
ID. 8148363
Dklt:11lry. 55-2
Pagt!. 129 al 2(5'.52 al 504)
Notes on the MSA, incfoding amendments and the mini settlements

(Edrn's comments in Green)
Full MSA-Pages 1-42-Casc No. RIDIND91152 in the Riverside County, CA
I of Page 1 says, "This Stipulation is entered into for the purpose of

compromising and settling contested issues between the parties. If for any reason
the waivers and releases fo this Stip1.1;lation.are not accepted by the Court and .lhis
Stipulation becomes null and void, or this Stipulation fails for any other reason
whatsoever, nothing contained herein shall be: an admission of fact or a statement
against inte1:est. Each party has refrained from making contentious statements, or
asserting positiOJ)S, Which might cause.the other to be upset, so that compromise
and settlement could be promoted and achieved."
Doesn;t this righi here give us the "out" to go afier anything we want and to hnve lht!
entire MSA null and void?
.Also, remembci that T wns completely fro7.ci1 qi.1l of nil the companies and any
information from sho1tly after I .filed for divorcc(Dcc 06) until jusl at before the closing
of the final .MSJ\.
4 of Pa~e2 - Rend all of it and A- C
They could use .this as nn argument that we agreed not to go back to the values of the
nssets we agreed to take. I will go into the dinercnt assets as we go through this, but one
thing that shoi1ld be pointed our.here, is Tim's very own testimony in the family court.
He made many folse statements. When I would point thnt out to the Judge Waters, her
response w~s always that Tim, .being given the Caption of the Ship title for onr assets.by
her, had a ficli1ciary responsibility to me, if it was found that he was not telling the truth.
A few cxmnplcs of this would he Tim stating that their was no community cash .tlow,
when he wns taking funds from Big Springs Reality (not payh1g commissions to the sales
people), Sunrise Ridge (not paying the partners their share when he took ftmds), sellh1g
community assets and using the !Uncls without a division given to me, and there nre more
examples.
Tim nl~o lied in a hearing when I was trying to stop CH from buying the.golf course fots.
First, he.had a sales person, Eric Ladd, no! the VP of Sales, which \vould be more
stand<~rd, submit an <iffidavit sppporting Tim's claim of the value of the Lots. Tim stated
thnt no commissions were being j:mid for the snlc of these Lots to CH. Yet, later we find
out that none other then Eric Ladd was promised 500k, of which 250k was paid to him.
Eric later filed a suit and got n judgment against me for greater then this amount.
II
8 of Page 4 all of page 5 -Can you read and tell me if you think this is binding or
it goes to the fraud thnl we talked nbout't
(102 of 387)
Case. 12-35986
08/191263
ID. 8148363
DklE11lry. 55-2
Page. 130 bl 2{5'.53 oi 504)
I 6 of Page 6 and all references to BGI stock below
This is where things could get a little grey to what is wri1tcn, what was said and what was
intended. Me taking the BGI stock was the way to finally get PC and Casa Captiva into
my legal ownership after being awarded it in the second mini settlement. If you will go
back and read those, you will !ind that Tim nnd his accountants were to find a way to get
both of these ass11ts i.nto my name without cr~nting tax issues. Taking the BGI stock pow,
in the final MSA, 1 was told would resolve tliis. Also, since I was also taking the YC
entities, it seemed like a 1rntural to simply take Tim's ownership of the stock.
(Remcrn ber, if though all of the stock was in Tim's name, it was still a community
property asset.)
I went into this agreement still with the understanding that both Tim and George Mack
had told me that the BGI note!:! to YDI us well as the Tim Blixscth notes to BGI (v.ihich l
ended up with as well.) would have a wny of working them out as years went along as
"forgiven" when we needed the tax write off's. Tim had always said that. I will go Jnto
this in iriore def ail when I !alk nbout the Ttimcrendo trnnsfor, but Tim also said tbat about
the 40mm tcw that:
If the above would have been as it was told to me, then the YC's would have paid the CS
loan off with the proceeds from Lot sales.

Upon the closing of the MSA,.thc bnnk accounts had been drained and/or were
overdrawn. Pat can go into more details of that as well. f, of course, was not counting on
this. Both American Bank and Pqlm Desert accounts were like this.
~urned qver cannot be reconciled. Thcirail
balances do notjavc. Again, Pat can go intomore detail on this.
In addition, the. pooks and records that were
There were contracts and payabies that Tim en!ercd into nfler knowing we were going to
be closing the MS/\. Bob Sumpter employment contract for one.
(a) of Page 7
CB Sunrise Pm:tners, LLC is the one that Moses Moore (YC's controller) told me that
Tim had taken Lhe fonds when things sold and hnd not paid the partners in this.
Tim had also signed agreements fro so111e 1mmagemcnt for St. Andrews allcr our signing
of.knowing Xwas getting this. He did this both in YDI and in YCW.
II
(c) of Page 7 - This did not happen and we had issues trying to make it happen.
(c) of Pnge7-Talk to Andy Patten about this. It was brought up in the UCC vs.
CS and Tim Blixseth with how Tim bought nnd sold this to himself By the time I
got it, he lmd'takcn the value out of it during the ti me I was frozen out of the
businesses. YC had an expert testily with how this was handled.
(103 of 387)
Case. 12-35986
ID. 8148383
08/1912013
DklEr1lry. 55-2
Ptlge. 131 al 2\!154 al 504)
B. of Page 9 - YCW was insolvent when I received it. The way this is written, I
would have no way ofknowing that.
C of Page 10 and (1) -
(3)
Agai11, Andy Patten will be hclpl'ul here. Tim did not disclose that he had taken millions
out of Big Springs; Reafity before this and bad not paid commissions. There has been
so111c1hing filed against him on this. Andy will Jinve the details. This is also where he
states that Eric Ladd was paid a commissioJ1 for the Golf Course Lot sale to CH. In
family court he testified that there was no commissions to be paid, but he already had the
deal 'vVith Eric, which I believe is how he got Eric to give the statement of value. The VP
of Sales should have done that, if it were to be <lone, b11t he could not be "bought"..(\ND
500k was not nearly what was owed lo the snles:people. l know that Charlie would be
happy to talk \yith you about the exact amounts, but this should also be in what was: filed.
At the time Tim did not pay them, which was mrn.:h longer then "30 - 60 days in arreiirs"
he told !hem that tJ1e money was needed to. YC operations. They later found out that-the
fonds were :used for boat slips and other things for Tim. This was also dming the "fro:t.en
out" part for me, but Big Springs was in Tim's nnme and therefore a community property
asset. At the time he was taking funds out.of Big Springs for his use, he was nlso stating
in fomily courl that there was no communily cash flow.
D of P~ge 10 I already addressed Big Sky Ridge, above. Please note that Big Sky
Ridge \.vos pmt of the YC Chapter 1l.
E of Page 11 Again this was already addressed regarding Sunrise Ridge and
Moses Moore slating that Tim told the funds ns '"his own personal piggy bank"
and .did not pny the partners. Tim did. not disclose this. This was also commun:lty
cash flow.
G of Page 11 This is n good one for the Western claims.
Hof Page l1 This did 119t happen and ended up being part of the YC BK.
All of the assets listed th.at Tim got, s~arting .on I. of page 12, had the value
that was perceived and no unforeseen liability.
17. of Page 14
At the time of signing this, Tim told me that the LcMoncl g1'.0up would do this, just
to be rid of him, by getting 1.0 to 2.0mm 011 closing. I ended up having to pay them
8mm ofthe35mm I got from CH, to get them to sign off. 1 was to get this back from
YC, as tltey were going to be tile owners of these B shares and not me persona!Jy. Of
course you know that did not happen. (Remember as well, I did not really get
3~m1nfrom CH, but only 22mm. Tim. liad borrowed 13111111 from them in 2()07 and
I took over tliat p1omissory note when I. got the Family Compound bacl<.)
(104 of 387)
Case. 12-35986
08/1/2013
ID. 8748363
DktE11uy. 55-2
Pilge. 132 bi 2'.555 Oi 504)
of Page 14 This is not a big deal, but Tim took most of this out. Somethings
\vere brought back by the YC cmp!Oyees that removed it per his direction once
they knew that he was not to take It, but not nearly all. (Maybe this is where he
got !he idea that I would take more out of 176?)
(3) of Page 15 including (a)-(d)
20.
This is where Tim trnnslerrcd Tamarindo to himself, before the final divorce decree. He
slated to 1.ne that George could help me do the s.ime on this promissory nole to YDI as
!hey had intended to do with !he o!her notes !Or the moneythat was taken from !he CS
loan. He went out of his way to make this clear, us he also stated that he did not wunt to
have nny tax issues from getting Tmnarindo in his name when the fonds thnt pu_rchused it
were from the CS loan. Of course no taxes were paid on nny of that money, 208nun, ns it
was booked as.a Imm and not a divi<len. Thisis the point oftJ1e UCC filing agninst Tim.
That suil continues in Feb 20i0. Andy Patten nn<l Troy Greenfield can be helpful here.
C of Page 16
Turks and Caiscos property was also purchased with CS Jocm funds, yet Tim was
nwardedthis wilhout having to pay back the funds for the purchase price. I think !his,
Tarnerndo and the other things go to show that, 'having me take on the entire promissory
noles for all the funds 1aken out by BGI and then Tim, would not be a fair division of
property, I i11.-fact, I had to pay back those noles and Tim got all of those properties, In
other \VOrds, just Turks and Tamerendo alone account for over 70mm of the 208mm
taken out, plus the othcr things that he got in the iinal MSA and the two mini se!tlemcnts.
If he had not told me that thosenotes could be worked out anolhcr way and they were
never fote1iclccl to be paid back, would I have thought taking that on AND giving him:
these assets.free. and clear was a foirctivision'? NO.
0.-of Page 18
I Inter found out !hat who that was transfe1'i'cd to was Jim Dolan. There arc several.things
that were transferred to him during !he. time of my "l'rozen out". Jim Do lair is also a third
partner of Tim's in Western Pacific Timber Company. He is also who Tim sold, well
under valued, our personal interest in !he FBO in Bozeman. Jim Dolan is also the one
that promised lo be pnying the BFI note on time, yet admitted to me and others that he
was talking wi!h Tim at the same time about !he.payment. Tim was te11ing others that
Jim was not going to be making the pay men! to keep me out of money.
I don't know .\vhere this lits in, but there is notany part of my assets that I Was awarded
that Tim did,hot call.people and interfere with me being uble to do things for the good
and benefit of myself. He contacted Alan Rye about my loans, which put Alan in foar of
his collateral in my share of BFI. Tim had no c~11Tent business witll Alan and his bank.
He contacted Warren Trcpp regarding Blxwnrc and caused all kinds of issue there where
we could not move forward. He hired Mike Flynn, who was Dennis M lawyer and
(105 of 387)
Case. 12-35986
081112013
ID. 8/48363
Okt2r1uy. 55-2
Paye. 133 di 2\5'.56 al 504)
handled things for Blxware. He and Mike Flynn started a press campaign <1gainst-me.
Many reporters .pave confirmed that Tim or Flynn would call them and tell them w11erc to
go and look things up that were, liled in the Reno courts. These were filed by Flynn.
Many times Judge Cook would not let them stand, but the damage was done as the
reporting.had already happened.
He docs still have business with Palm Desert National Bank, but continued to give them
misinformation about my businesses and me.
25. of Page 20
This is another area that Andy Pnlten can hdp you understand. There has been
something l'llecl against Tim in regard to the bundling of this Lot. He had just before he
"sold it to himself with no cash down and a promissory note of2mm" had placed a :value
of3.4mm on iL YC has filed this against him. Paul Moore might also havl! additional
information.
Aller the closing of the MSA, I found out that Tim ended up somehow getting this Lot to
the man !hat he purchased Tamerndo from. I believe that Tim never intended to pay this
2mm to YC, just like alJ the other promissory note he had signed with YC/YDI.
C. of Page 22 Read and tell me what you think of this one.
E.IF.C. -Of Pages 22/23
We never received proper books nnd records,. minutes and other things . .Pat can go Into
this more. We still, a year later, have not been able to figure much of this out with how
they turned what they did ovGr.
J. of Pngc 23
here that as or June 1, 2008 I was to receive all cash etc ............. again, Pal cnn
tell you how things were turned ovei to us. Tim also entered into several contracts that I
two of which I have mentioned already. Tim also told me that he had paid nll of YC
payables current with a deal he did with Wayne Prim (the other third owner of WPT)
This turned out not to be true. In Judge Tuckers courtroom, Bob Sumpter, on Tim's
behait: in ApdLor May of2008, stated as much as well..
Jtsl~1tes
Pages 24/25/26/27 in reference to taxes I want to talk about in our meeting, as

it is too. hard to put in all in this overview.
11:1
(a) of.Page 27
Interesting that they admit here that there was community cash flow from Big Springs,
Big Sky Ridge LLC and Sunrise Ridge LLC and that Tim took all of that money. This
was during the time that he wns stating that there was no community cash now. I had to
(106 of 387)
Case. 12-35986
08JiJ2013
ID. 8/48363
DklE11lry. 55-2
Viiye. 134 di 29}151 bi 504)
bonow money lo just live during this time, ns I did not get a penny of tempormy spousal
support nor long term after. I did not catch this before,
33. of :Page 29
This is where Troy Greenfield had a "lielcl" dny during the UCC vs CS and Tim Blixseth.
Tim stated on the stand that the "cornerstom.! of the MSA for him" was me taking over
his fiduciary responsibility !'or any and all of his actions in the business that he had run
nnd I got. Jt would be worth a phone call to him on this one. Andy Patten was there as
well. Troy told me that he did 11ot think thnt this area of the MSA would stand up as I
could not hold Tim harmless nor take on his actions ifthere were fraud and other things
involved. I, of course, until Tim stated that ii1 court, did not think in anyway that the
''cornerstone" of the MSA l'or Tim was this.
35, of Page 30
Here is where I think we have a HUGE upside i r you can find in the law where this
waivercnnnot stnnd. As I to.Id you, when Jn!Tc put together the filing for spousal support,
it pend led out at.over 2.0mm per month.
Tim repeatedly said at some point that there wns no more community cash flow. We
have since found out that this wns not true. [le just kept all the money for himselt:
Because he was saying there was no cash flow, I had to borrow money to live on, when
there was in !'net fonds for the community.
If the assets would have been what I was lead lo believe they were AND if Tim had not
started his campaign to "crush and destroy hcr" ........ (it then turned into "keep, after her
until she is crnshcci or dead"') ........ I would not have needed the spousal support.
But the focts arc now clear that there wm: cash llow that I should hnvc received at the
time I was frozen out. The assets and more over the liabilities that 1 was mislead about,
were such (or not such as far as assets go) to'.tnaintain my lifestyle, which is the letter of
the forniiy law, let alone, any lifestyle. I am sitting here in a Chapter 7.
Lnsl year nt nbout this time, just before signing the MSA, I had manugenble liabilities, no
money borrowed.against Porcupine Creek 'nor Casa Captiva. The fact is that Tim knew
exactly what he\:vas doing and what I was getting myself into, which is why the
cornerstone the MSA to him, was what it wns.
or
JfI had ki1own any of' this, I would not have settled in the way I did. I would have been
granted both temp aml long-term spousal support. I would not have had to contim1c to
borrow money to live. I would ilot have borrowed 35mm to get the MSA closed.
Remember, of the 35mm, I personally only gotjust over 1.0mm of that. The rest went to
Tim or to YC. The part that went to YC should hnvc been paid bnck to me, if things there
\.Vere as they were presented.
(107 of 387)
Case. 12-35988
0811912013
ID. 8148363
DktEl1lry. 55-2
Page. 135 bl 2'.5'.58 al 504)
In CA family lnw, a 25 yeur marriage with !he income and tax returns that we had, would
have given me a very nice annual income from spousal support.
36. - 44. of Pages 30 - 34 You guys me going to have lo read and tell me what
you think.
Really for you guys ......... it's all the reps and warranties you will have 'to tell
me what you think.
64. of.Page 4 f
I think this helps us to justify, if we need to, why we are filing onr motions 011 the MSA
in !he BK courts in Montana, don'! you?
Okay, I most likely gave you ni.orc then you wanted and it's not in great order. Sorry.
Let me know i I' something does hot make sense, I thii1k Joe E might be of some help here
loo.
You guys sliouid also read the Assignment Of Conipany Interests Agreement and the
Assumption Agrce.ment. There are several 1hings in the mini settlements, like Tim was to
keep paying the ove'rhcad for PC, but that ended as he said there was no community cash
flow. We now know there was. so ram not sure whi::re '"'"c can fit that in.
Hope this helps. Edra
(108 of 387)
Case. 12-35988
08/19/2013
ID. 8148363
DklE11lry. 55-2
EXHIBIT A-2
Piige. 138 bl 29}159 al 504)
(109 of 387)
Case. 12-35986
0811912013
ID. 8148363
DklE11lry. 55-2
Page. 131 oi 2(5'.60 61 504)
Notes on the MSA, including amendments and the mini settlements

"'(Edra>s comments in Green)
Full MSA-.Pages 1- 42- Case No. RIDIND91 l52 in the Riverside County, CA
1 of Page 1 says, "This Stipulation is entered into for the purpose of

compromising and settling contested~ssues between the parties. If for any reason
the waivers and releases:in this Stipufot,ion are not accepted by the Court and this
Stipulation becomes null and void, or: this Stipulation fails for any other reason
whatsoever, nothing ~Qntained herein sh(lll be an admission of fact or a statement
against interest. Each party has refrained from making contentious statements, or
asserting positions, which might cause the other to be upset, so that compromi~e
and settlement could be promoted and achieved."
Do~sn 't this .right here give us the "out" to go after anythi11g we want and to have the
entire MSA nun and void?
Also, remember that I was completely frozen out of all the companies and any
information from shortly ufter I filed for divorce (Dec 06) until just at before the closing
ofthe finaJ.MSA.
4of Page 2-Read all of it and A--C

They could use this !,IS an argument tliat we :agreed not to go back to the values of the
assets we agreed to lake. lwill go into the clifforcnt assets as we go through this, but one
thing tl1at should be pointed out here, is Tim's very 6wn testimony in the family court.
He made many false statements. When I wonld point that.out to the Juqge Waters, her
response wns always that Tim, being given the Caption of the Ship title :for our assets by
her, had a liduciary responsibility to me, ifit wns found tlml he was not telling the trutlt.
A few examples of this would be Tirn stating that their was ilo community cash flow,
when. he was taking funds fromBig Springs Reality (not paying commissio1~ to the sales
people), Sunrise Ridge (not paying the pa1;tners their share when he took ftmds), selling
conununity assets and using the funds without. a division given to me, and there are more
examples.'
Tim also lied in a hearing when I was trying to stop C:H from buying the golf course lots.
First, he had a sules person, Eric Ladd, not the VP of Sales, which would be more
standard, submit an affidavit supporting Tim's ch1im of the vuluc of the Lots. Tim stated
that no. commissions were being paid for the sale of these Lots to CH. Yet, later weJind
out that none other then Eric La.dd was promised 500k, of which 250k was paid to him.
Eric later filed a suit and got ujudgrnent against me for greater then this amount.
8 of Page 4,ail of page.5-Can you read and tell me if you think this i.s binding or
it goes to the fraud that we talked about?
DM- Exhibit 11
(110 of 387)
Case. 12-35986
081i9J2013
ID. 8148363
DklE11uy. 55-2
Page. 138 bl 2(561 oi 504)
16 of Page 6 and all references to BGI stock below
This is where things could get a little grey to what is written, what was said and what was
intended. Me laking the BGI stock was the way to finally get PC and Casa Captiva into
my legal ownership after being awarded it in t11e second mini settlement. If you will go
back and read those, you will find thut Tim nnd his accountants were to find a way to get
both of these assets into my name without creating tax issues. Taking the BGI stock now,
in the final MSA, I .was told would resolve this. Also, since I was also taking the YC
entities, ii seemed like a natural to simply take Tim's ownership of the stock.
(Remember, if though all of the stock was in.Tim's name, it was stm a community
property asset.}
I went into this agreement still with the w1dcrstancling that both Tim and George Mack
had told me that the I3GI notes to YDI as well as the Tim Blixseth notes to BGI (which I
ended up with as well.) would have a way of working them out as years went along as
"forgiven" whe1i we needed the tax write offs. Tim had always said that. I will go into
this inmol'e detail when .I talk about the Tamerendo transfer, but Tim also said that about
the 40niin for that:
lfthe above would have been as it was told to me, then the YC's would have paid the CS
loan off with the proceeds from Lot sules.
Upon the closing of the MSA, the bank accounts had been drained and/or were
overdrawn. Pat can go into more details of that ns well. I, of course, was not counting on
this. Botli An.ierican Bank and Palm Desert accounts were like this.
In addition, lhe books and reco1:ds that were turned over cannot be reconciled. The trail.
balances do notjave. Again, Pal can go into more detail on this.
There were contracts and payables tllat Tim entered into after knowing we were going to
be closing the MSA. Bob Sumpter employment contract for one.
(a) of Page 7
CB Sunrise Partners, LLC is the one that Moses Moore (YC's controller) told nie that
Tim had taken the funds when things sold <ind had not paid the partners in this.
Tim had iilso signed agreements fro some 1irnnagemcnt for St. Andrews after our signing
of knowing I was getting this. He did this both in YDI and in YCW.
(c) of Pa~e 7 - This did not happen m1Cl we had issues trying to make it happen.
(e) of Page 7 - Talk to Andy Patten abollt this. It was brought up in the UCC-vs.
CS and Tim Blixscth with how Tim bought and sold this to himself By the time I
got it, he hnd taken the value out of it during the time [was frozen out of the
businesses. YC had an expe1t testify with how this was handled.
2
DM - Exhibit 11
(111 of 387)
Case. 12-35986
68/912613
ID. 8148363
DklE11by. 55-2
Page. 139 ol 29}i82 al 504)
B. of Page 9- YCW was insolvent when I received it. The way this is written, I
wouklhave no way of knowing that.
C of Page 10 and (l}-(3)
Again, Andy Patten will be helpful here. Tim.did not disclose that he had taken millions
out of Big Springs Reality before this and hnd 11ot paid commissions. There has been
something filed against him on this. Andy will huve the details. This is also where he
states that Eric Ludd was paid a commission fo1' the Golf Course Lot sale to CH. In
family court he testified that there was no commissions to be paid, but he already had the
deal with Ei:ic;which I believe is how he got Eric to give the statement of value. The VP
of Sales should have done that, if it were to be clone, but he could not be "bought". AND
50ok was not nearly what was owed to the snlcs people. J know that Chnrlie would be
lmppy-.to talk with you ubout the exact amounts, but th.is should also be in what Wfls filed.
At the time Tim did not pay them, which was much longer then "30- 60 days in anears"
he told them that the money was needed tq YC operations. They later found out that the
funds were used for boat slips and other things for Tim. This was also during the "frozen
out" part for me, btit Big Springs was in Tim's Imme and therefore n community properly
asset. At the time he was taking l\mds out of Big Springs for his use, he was also stating
in family court lilanhere was no community cash flow.
D of Page 10 I already flddressed Big Sky Ridge, above. Please note that Big Sky
Ridge wos part of the YC Chapter 11.
E qf Page 11 Again this was already addressed regarding Sunrise Ridge and
Moscs.Moo1e stating thut Tim told the funds as "his own personal piggy bank"
and did not pay the partners. Tim did not disclose this. This was also community
cash flow.
G of Page 11 This is a good one for the Western claims.
Hof Page 11 This did not happen und ended up being pmt of the YC BK.
All of~he assets listed that Tim got, starting on I. of page 12, had the value
that was perceived and no unforeseen liability.
17. qfPage J4
At the time of signing this, Tim told me that the LeMond group would do this, just
to be rid of him, by getting LO to 2.0mm on closing. I ended up having to pay them
8mm of the 35mm f got from CH, to gettllem to sign off~ I was to get this back fr om
YC, as they were going to be the owners ofthese B shares and not me personally. Of
course youknowthat did not happen. (Remember as well, I did not really get
35mm from. ca:, but only 22mm. Tim had !Jorrowed 13mm from them in 2007 and
I took over that promissory note when I got the Family Compound back.)
3
DM - Exhibit 11
(112 of 387)
Case. 12-35986
08/1912613
ID. 8148363
DklE11lly. 55-2
Hlge. 140 bl 2!:(563 al 504)
20. of Page.14 This is not a big deal, but Tim took most of this out. Somethings
were brought back by the YC employees that removed it per his direction once
they knew that he was-not to take it, .but not nearly all. (Maybe this.is where he
got the idea that I would take .more out of 176?)
(3) of Page 15 including (a)-(d)
This is where Tim \.ransferred Tamarindo lo himself, before the final divorce decree. He
stated to me that George couid help me do the same on this promissory note to YDI as
they had intended to do with the other notes for the money that was taken from the CS
loan. He went out of his way to muke this clear, as he ulso s!utedthat he did not want fo
have any tax issues from getting Tamarinclo in his name when the funds that purchased it
were from.t~e CS .loan. Of course no taxes were paid on any of that money, 208mm, asit
was booked as n loan and not a.dividen. This is the point of the UCC filing against Tim..
That suit continues in Feb '.2010. Andy Patten and Troy Greenfield can be helpti.tl here.
C of Page 16
Tm-ks and .Caiscos property was also purchased with CS Joan funds, yet Tim was
awarded this without having to pay back the l'uncls for the purchase price. I think th.is,
Tamcrndo and the other things go to show that, having me take on the entire promissory
notes for all the.funds taken out by BGI and then Tim, would not be a fair division of
property, l in foct, I had to pay back thosenotes and Tim got all ofU10se properties. in
othe1 worqs; j ust"Turks and Tamerendo alone account for over 70mm of th~ 208mm
taken Qlll, plus the other things that he got in the final MSA.and the two mini settlements.
If11e l1ad not told me that those 116tes could be' worked out another way and they were
never intended lo be paid back, would I have thought taking that on AND giving him
these assets free and clear was a fair division? NO.
0. ofPage18
I later found out that who that was trnnsl'crrcd to was.Jim Dolan. There are several things
that were lrnnsferred lo him during the time of my "frozen out". Jim Dolan is also a third
partner of1'in1's in Western Pacific Timber Company. He is also w110 Tim sold, we!)
under valued, our personal interest .in the FBO in Bozeman. Jim Dolan is also the one
that promised t_o be paying lhe BPI note on time, yet udmittcc.I to me and oihers that he
was talking with Tim at the same time about lhepayme11t. Tim was telling others that
Jim was not.going to be making the payment to keep me out of money.
I don't know where this fits in, but there is not any part of my assets that I was awarded
that Tim ~lid.not call people and interfere with me being able to do things for the good
and benefit of myself. He contacted Alan Rye about my loans, which put Alan in fear of
his collateral in my share of BFI. Tim bud no current business with /\Ian and his bank.
He contacted WmTen Trepp regarding Blxware and caused all kinds of issue there where
we could not move forward. He hired Mike Flynn, who was Dennis M lawyer arid
4
DM - Exhibit 11
(113 of 387)
Case. 12-35986
08Jf9/2013
ID. 8148363
DklElllry. 55-2
Page. 141 bl 29'5'.64 ui 504)
hnndled things for Blxware. He and Mike J.'lynn started a press campaign against me.
Manyteporters have confirmed that Tim or Flynn would call them and tell them where to
go a'nd look things up that were filed in the Reno courts. These were filed by Flynn.
Many times Judge Cook would not let them s1and, but the damage was done as the
reporlin$ had already happened. We must knock Mike Flynn off the MSA matter. We
need to do whatever it takes, nor matter what we have to file.
He does s1ill have business with Palm Desert National Bank, but continued to give them
misinfo11nation about my businesses and me.
As you guys well know I had to borrow money from my friends like Burt Sugarman and
others to stay alive during this time.
25. of Page 20
This is another area that Andy Patten can help you understund. There has been
something filed against Tim in regard to the handling of this Lot. He had just before he
"sold it to hlmselfwith Ito cash down and a ptomissory note of2mm" had placed a vaiue
of3.4mm oq jt. YC has filed thi.s against him. Paul Moore might also have additional
in.formation.
After the closing of the MSA, I found out that Tim ended up somehow getting this Lot to
the man that he purchased Tamerndo from. I believe that Tim never intended to pay this
2mm ~o YC,just like all the other promissory note he had signed with YC/YDI.
C. ofPage22 Read and tell me what you think ofthis one.
E./F.G. of Page::; 22/23
We.never received proper books and records, minutes and other things. Pat can go into
ll1is more. Wtj; still,' a year later, have not been able to figure much of this out with hqw
they turned what they did over.
J. bfPage23
ft stntcs here that asof June 1, 2008 I was io receive all cash etc ............. again, Pat.can
tell you how things wei'e turned over to us. Tim also entered into several contracts that I
two of which' I. l1aw mentioned already. Tim also told me that he had paid all of YC
payables current with u deal he did with Wayne Prim (the other third owner orWPT)
This turned out not to be trne. I talked to Wayne aho11t this. In Judge Tuckers
courtroom, Bob Sumpter, on Tim's behalf, i.n April or May of2008, stated as.much as
well.
Pages 24/25/26/27 in reference to taxes I want to talk about in our meeting, as

it is too hard to put in all in this overview.
5
DM - Exhibit 11
(114 of 387)
Case. 12-35986
08119/2013
ID. 8148363
DklE11lr y. 55-2
Page. 142 al 2(5'.65 al 504)
(a) of Page 27
Interesting th~t they admit here that there was community cash flow from Big Springs,
Big sky Ridge LLC and Sunrise Ridge LLC and that Tim took all of that money. This
was during the time that he was slating that there was no community cash flow. I had to
borrow money to just live during this time, as I did not .get a penny of temporary spousal
support nor long term after. I did not catch this before.
33. ofPage29
This is where Troy Greenfield had a "fide!" clay during the UCC vs CS and Tim Blixseth.
Tim stated 011 the stand that the "cornerstone of the MSA for him" was me taking over
his fiduciary responsibility forany and all of his actions in the business that he had rtlri
and I got. It would be worth a phone call tohim on this one. Andy Patten was there as
well. Troy to.Id me that he did not think that. this men of the MSA would stand up as 1
could not hold Tim harmless nqr take on his actions ifthere were fraud and other things
involved. I, of c_orse, until Tim stated that in court, did not t)link in anyway that the
"cornerstone" of the MSA. but 1 \WIS surely aware that it was important to him. How can
l get nround this issue ??
35. of Page 30
Herc is where I think we have a HUGE upside if you can find in the law where this
waiver cannot.stand. As I told-you, when Jane put together the filing for spousal supp_ort,
it penciled out at over 2.0mm per month, but I never expected to get that.
Tim.repeatedly said at some point that there was no more community cash flow. We
have since found out that th.is was not true. He just kept al 1 the money for himself.
Because he was saying there was no cash tlow,l had to borrow money to live on, when
there was in fact funds for the community.
If the assets wouJd have been What I was lead to believe they were AND if Tim had not
started his campaign to "crush and destroy her" ........ (it then turned into "keep after her
until she is crushed or dead") ....... .I would not have needed the spousal support.
But the 111cts are 110wclearlhat there was cash flow that I :>hould have received at the
time l was frozen out. The assets and more over the liabilities that I was mislead about,
were such (or not such as for as nssets go) to maintain my lifestyle, wh.icl) is the letter of
the family law, let alone, any lifestyle. I mn sitting here in u Chapter 7.
Last year at nbout this time, just before signing the MSA, I had manageable liabilities, no
money borrowed against Porcupine Creek nor Casa Captiva. The fact is that Tim knew
exactly what he was doing and what I was getting myself into, which is why the
cornerstone .of the MSA to him, was what it was.
6
DM - Exhibit 11
(115 of 387)
Case. 12-35986
08/1912013
ID. 8148363
OktE11lry. 55-2
Paye. 143 al 29}166 oi 564)
If I had known any of this, I would not lmvq settled in the way I did. r would have been
granted both temp zmd long-term spousal support. I would not have had to continue to
borrow noney to live. I would not have borrowe<l 35mm to get the MSA closed.
Remember, of the 35mm, I-personally only got just over l .Omm of that. The rest went to
Tim.or to YC. The part that went to YC should have been paid back to tne, if!hings there
were as they were presented.
In CA fornily law, a 25 year marriage with the income and ta~ returns that we bad, would
have given me a very nice annual income from spousal support.
It
36. -44. of Pages 30-34 You guys are going to have to read and tell me what
you think.
Really for you guys ........ it's all the reps and warranties you will have to tell
me what you think.
64. of Page.41
I think this helps us to justify why we are lilingour motions on the MSA in the BK coi:1rts
in Montana, don't you? Remember we huvc ntldcc.I hdp there from the l3K Jutlge who
loves us, anti hates Tim and Mikt: Flynn. Al this point they could not gel a decent ruling
in their fovor rrom that Judge if they tried. Either way, SB and BS have things in place in
that courtroom 10 help us. We need to muke sure the vulidity ol'the rvtSA never ends up
being decided by Judge Wnters. That would be a nightmare for all of us.
Obvfously I have not mentioned the collapse of.the US economy in this document, and
don't want to go down that road. Don't let that become an issue in theMSA 111alter.
Okay, I most likely gave yo1=1 more then you wanted and it's not in great order. 8011"y.
Let me know if something docs not make sense. J think Joe E might be of some help here
too.
You guys should also read the Assignment Of Company Interests Agreement am! the
Assumption Agreement. There are several things in the mini settlements, like Tim was to
keep j)aying the overhead for PC, but that ended as he said there was no community cash
flow. We now know there was, so I am not sure where we can fit that in.
Hope this helps. Edra
DM - Exhibit 11
(116 of 387)
Case. 12-35986
08/1912013
ID. 8748353
DklE11by. 55-2
EXHIBIT A-3
Page. 144 61 2(!161 al 504)
(117 of 387)
Case. 12-35986
0811912013
ID. 8148363
DktE11lry. 55-2
Paye. 145 al 2$88 al 504)
Dennis Holahan
From:
Sent:
To:
Subject:
LearG2@aol.com
S.uni;lay, September 20, 2009 4:38PM
dholahan@mindspring.com
hope this helps
Notes on the MSA, including amendments and the mini settlements

(Edr~'s
cnm1111.;n{:s in Gn.cn)
Full MSA - Pages l - 42 - Case No. RIDIND91152 in the Riverside County, CA

I of Page 1 says, "This Stipulation is entered into for the purpose of compromising and settling contested
issues between the parties. If.for any reason the waivers and releases in this Stipulation are not accepted by the
Court and tbis Stipulation i;>ecomes null andvoid, or this Stipulation fails for any other reason whatsoe:ver,
nothing contained herdn shall be an admission of fact or a statementagainst interest. Each party has refrained
from mak;i!fg contentious statemerits, or asserting posi~ions, which might cause the other to be upset, so that
compromise and settlement could be promoted and achieved."
Doesn't tl1is rfght here give us the out" lo go aft'cnmything we want and to haw the tmtirc MSA null and void?
Also, remember that I was complctdy Jrozcn out of ull Lhe companies and any infrirnrntion frnm shortly artcr I
filed 1.br divorce (Dec 06) u11til just at befi>rc the closing-Of the finnl MSA.
4 ofPage 2- Read al.I of:it and A - C

11H~Y
could usf) this as <1!1 argument thut we <tgrced not to go back to the values of the asset'> we agreed LO take.
will go inll) tbc different assets us we go through. this, lrnL one thing that should be pointed out here. is Tim's
wry own tcstimouy i11 the fomily c:ou.rt. I it.' ma<le many fa lsL~ stutements. W.hcn 1 would poinnhat ou.t to ti.le
Judge Waters, her rcsponiic ww,; always thm Tim, bci1\g given the Caption of the Ship title for 0111 os:.;ctsby her,
bad a fiduciary responsibility to. me. if it was found that'he was not telling the truth.
A few exnmples of this wo11ld be Tim iituting that their was.no comnnmity cash flow, when he wi1s taking funds
from Big Springs Reality (not paying c~ol)lmissions to the sales pcovlc). Sunrise Ridge (not pnying the pa1i11ers
their share when he took fonds), selling community assets and using the funds without a divisi.011 giv.cn to me,
and there arc more examples.
Tim ulsll lied in u h.mringwhcn l was !Tying to stop Cl I from buying the golf.course lots. First. he had a :;ales
person, Eric Lacki, no!' the\' P of Sales, whicl\ would be more standard, sub1nit na nlTidavit st1ppo11ing Ti:tn 's
claim of tbc val'uc qf the.Lots. Tin1 state1.l that no commissions were being paid for the sale of these Lois t<i
CH. Yel, lfltcr we find out lha.t none other then Eric Lacki was promised 500k, of which 250k was paiu lo him.
Eric later fiicd a s.uit and got a judgmcnl against me for greater then this amount.
8 of Page 4 all.of page 5- Can you read and tell me ii' you th.ink this is binding or it goes to the fraud that we
talked about?
16 of Page 6 ahd all.references to BGI stock below
This is where thiugs (.:ould get d little grey to wha1 is written, what was said and what was intended. l'v!e tnkin.g
1
(118 of 387)
Case. 12-35986
081i9J2013
ID. 8148363
DklElilry. 55-2
Page. 148 61 2\5'.69 al 564)
the BGT stock wa~ 1he way to finally gel" J>C aud Casa Capti.vu into my legal ownership after being uwmcled it in
the second mini stillkn1enr. 1f you will go bnck and read those, you will find !hat Tim and his ac.countants were
lo find a WllY to get both of these as:;cts into my nnmcwithout cr,1ating tnx issues. Taking the !;!GI stoek now,
in the final MSA, J was to lei \.\lt)\lld resolve this. Al~o, since I was ulso taking the YC entities, it seemed like a
natural to simply take Tim's ownership of thc stock. (Remember, if thm1gh all of the stoek wns 'in Tim's name,
it was still a community pn1pcrty asset.)
r went i.nto tllis agreement sti.IJ with the undersrnnding that
both Tim and George Mack had told me thar.thc BGl

notes to YDI us wel I as the Tim Blixscth notes lo BG! (which J ended up witll as well.) would Irnve n wny of
working them outas years went along us "forgiven" when we neecled the tox write ol'JS. Tim hnd always said
that'. I will go inrn 1ld:; in more clew ii when I talk aboul th0 Tnmerendo transfer, but Tim also said that about the
40mm for th.at.
If the above wnuld have. been m; it wn.s told ro me, then the 'r'C's.wonld have paid the CS loan off with the
proceeds from Loi sales ..
Upon the closing of the MS/\, the bank ac.cmmts Imel bL'en llrnined nnd/or were overdrawn. Pat c.:nn go i1110
more details of thut as well. I, of eomse, was not couming on this. Both American Bank and Palm Dt::scrt
accounrs were like this.
fn additi.01i, t:Iw books and records that were turned over eunnot be reconciled. The trail bnbnecs do not jnve.
Again. Patcnn go into.more detail on this.
There were contrncJs and f)~tyables tlwt Tim entered Lnlti il;ftcr knowing we were going to be dosing the MSA.
Bob Sumpter employment ccinlrnct fbr one.
(a) of Page 7
CB Sunrise Partners, LLC is the one that rvtoscs Moure (YC's controller) told inc thnt Tim had tuken the l'untls
when things sold and hnd not paid the partners in 1his.
Tim had also signed agreements fro some management for St. Andrews aflt:r our signing of knowrng I was
getting this. He did this both in YDl anu in YCVl.
(c) of Page 7 -Thi8 did. nor happcn nm! we had 1ssul's irying to maJrn it happen.
(e) of Page 7 - Tu'lk to Andy Pa.ttcn about this. lt wns brought up il1 the UCC vs. CS and TimBlixscth witb
how Tim bought and sold thisto himself By the time 1 got it, he had taken the value out of it<luring the time J
was frozen out of the businesses. YC had an expc11 te:;ti ly With how this was hnndled.
B. of Page 9 - YC\V was insolvent when I received ii. The way this is written, J would hnvc
knowing that.
110
way of
C of Page 10 and (1)-(3)
Again, Andy Patten will be helpful here. Tim did 1101 disclose tllat be had taken millions out of Big Springs
Reality before this illld had 1m~ pnid commissio11s. Th~~rc has been something filed aguinst 11im on this. Andy
will have rhc details. This is also wh.cre hQ stmes that I~ric Ladd \\las paid a commission for the Ciolf C<>Urse Lot
sale to CH. In family court .he testified that there was no commissions to be paid, but he alrendy haci the deal
\Vith Eric, whic'h l believe is how he got Eric to give the statement ofvalt1c. The Y P of Sales should lrnvc Jone
thnt, if it were to be done . but he could not he "bought". A ND 500k was not nearly what waii owed to the sales
2
(119 of 387)
Case. 12-35986
0811912013
ID. 8148363
DktEiilry. 55-2
Page. 141 oi 2!:{5'.16 oi 504)
people. l know thatCliarlic would be happy to talk with you about the cxnci amounts, but this shoulu also be in
what was filed. At the time Ti"m did not pay them. which was much longer the.n "30- 60 dnys in am:m:s" he
told them that the money wns needed to YC operation:;. They later found out tbat the funds were used for bont
slips and other things for Tim .. This was also during the ''frozen out" pmt for rne, but Big Springs \VUS in Tim's
nmne and therefore a co1rnn11nity property asset. At1he time be was taking funds out of Big Springs l'nr his use,
he was also stating in fomily-comt that there was no community cash flow.
D of Page 10 I already addressed Big Sky Ridge, ab1wc. Please note that Big Sky Ridge was pa1t of the YC
Chapter l l.
E of Page 11 Again this was already addressed rngarding Sunrise RidgG and Moses Moore stating that Tim
told the funds ns "his own personal piggy bank" and did nor pay the partners. Tilll did not disclose 1hi~. This
was nlso community cnsh flow.
G of Page 11 Thi ..; is a gone! one for the Western L!lui111s.

Hof Page 11 This did not happen and ended up bL:ing part or the \'C Bf(.
All of the
assets)iste~
that Tim got, starting 011 I. of page 12, had the value that was perceived and no
unforeseen liability.
17. of Page 14
At the time of signing this, Tim toJd me that the LelVlond group would do this. just to be -rid of him, by gettil1g
J .0 to 2.001111 on <.:Josi ng. J rnded up luiving to pny thL"m 8111m of the 35mm 1 got from CJ I, to get them to sigo
off. 1was to get this b!lck from YC, as they were going to be. the owners of these B shares and not me
personally. Of course you know that did not happen. (Rclllcmber as well. I did not really get 35mm l.'ro111 CH,
bllt only 22mm. Tim hnu borrowed l 3mn1 from them in 2007 and I took over that promissory notl! v.lhcn I got
the Family Compm~nd b;ic.lc)
20. of Page 14 this is.not a big den!, but Tim took 111ost of this 01.1t. Somethings were brought back by the
YC employees thnt removed ~t per his d ircct ion on cl! they knew !hut he was not to take i1, b11t not nearly alt
(Maybe this is where he got th.\ idcu that 1 would take rnnre nut of J 76?)
(3) of Page 15 hicluding
(~)
- (d)
This is where Tim trnnsfcrrL"d Tanrnrincln to himself~ before the final divorce decree. IJc :m1lcd lo 1111.:. ti1at
George could help me do the same on this pnnnissOl'y 111lle to YDl as:they had intended to dowip1 the other
notes for the money that was taken frnm the CS Joan. I le went out of his \.vay to make this dear; us he nlso
.snited that J1c di cl 1101want10 Mve any tax issue:-; f'rn1n gL"tting Tnmarimlo in his name. when the limds Lha1
purchased it were f'rom the {!S 1onn. Of course no la;>; cs were pnitl on any of ti.tat money, ~08ni111. us it was
booked as a loan ancL not a dividcn. This .is the point of' 1hc ucc J:illng ~igainst Tim. That suit.elinti1\ucs in "Feb
2010. Andy Patten and Troy Grccn:fklcl can be he-lpful here.
C of Page 16
Turks and Caiscos propertywus also purc:hnscd with CS lotin funds, yet Tim was awarded this without huving
to pay back the f11ncls for the purclrnse price. I think t11is. Tamerndo nnd 1he other things go to show 1-hc-n, having
me take on the entire promissory notes foJ' n!J the funds takc11 out by BGl and then Tim, would. not be a !'air
division of property, l in 1'.uct. I bnd to pay back those norcs and Tim got ull of i'hose properties. In other words,
jus1 Turks and Tarncrcndo alone account fot over 70mn1 or the 208rnin taken out, plus the other things.that he
3
(120 of 387)
Case. 12-35986
08/1912013
10. 8148363
DklE11lry. 55-2
Pi:ige. 148 di B{S:fi oi 504)
g0t in the :final MSA alld the two mini sculemenls. If he liad not told me that those notes could be worked out
another way nnd lheywcre never intended Lo be paid bm:k, would I have tl.iougb1 taking that 011 AND giving
him these as::;ets free um! clear was a fair division'? NO.
0. of Page 18
I later found out tharwho that was trarndi:.rn:d to was Jim Dolnn. Then) arc severnl things thar\wre tnmsforrc<l
to him d11ring the ti111e of my ''frozcu out.". Jim Dolmi is al::;o u lhird partner ofTirn's in \Ves1ern J><1cilk Timber
Company. He is nlso who Tim solcl, well tinder valued, om personal inten!fit it1 the Fl30 in Bozeman .. Jim
Dolan is also the one that promised tu he paying tbe B1:1 nolc on time. yd admitted to me and others that lw wa~;
talking with Tim at Jhc :-;a111e time ul)l)ul the pnymt~nl. Ti111 \vas telling orhers that Jim wus not going Ill be
rnnking tht: payment ti'> keep rnc 011t ofmnney.
l don't know where this lits in. but there i:; not any pan of my assets tlrn t J was a\\'ardcd thar Tim did not cull
people andintc:-rrcrc with 111c beillg able tl.l do things f'or the good ancl benefit ofmysdf I le contacted Alan Rye
about my loans, which pnt. Alari in fonr of his collaternl in rny share of.BF!. Tim had no current business with
Alan and his bank.
He contacted Warren Trcpp regarding. Blxware and cm1st~tLall kinds of issue then:: where we co11ld 11ot.. 111nvc
forward. I le hinxi Mike. Flynn, who wns .Dmmis M lawyer and .handled thing!i for Blxwnre. l.le onrJ Mike Flynn
scurted a press campaign against me. M~iny reporters have confirmed lhat Tim or Flynn would call them and ten
tht:m where to go Jmd look thingi> up that were filed in f'11c. Reno courts. Th~se were filed by Flynn. Many times
Judge Cook would not lei them slHnd. bnt the damage wa~ done as the reporting had already happened.
He does still h<1vc business with Palm Desert Natfonal Bank, b\lt continued lo give them misinf1.i1-matim1 nbaut
my businessc:; and nu:.
25. of Page 20
This is another areathat Andy .Patten can help you Ull(lcrstm1d. There ha:-; been something filed against Tim in
regard to the hand! ing.oJ thb; Lot. He had just before he "sold it to himself with no cash down and a promisso1y
note of2mm'' had placed 11 value of3.4mm nn it. YC has JI led this ng.ainst him. Paul Moore might also hnve
utiditionu I i 11 lbrrnntirn1.
AHcr the closing ol' the rvf.S.A, I l'ou.nd out Ihm Tj111 ended up somehow getting this Lot to the man that h~
purchased Tamerndq from. r believe thnt Tim never intended to pay this 2111111 to '{C', just likcull. the other
promissory nnte he Imel signed with YC/YDl.
C. of Page 22 Read and ten me. what you think of1his one.
EJF.G. of Pages 22/23

\Ve never rceeivcd JXOpcr bl)oh nnd records, 111 inulcs und other things. Pat can go into this more~ Wc sti 11. a
year later, have 1101 bceri able to figure 11111ch of this out with how they turned wlmt they diti over.
J. of Page 23
lt states here that as or June J., 2008 I was to receive all cnsb etc ............. again, Pat can tell ybu bow things
were tumed over to us. Tini also entered. into. several contracts tlrnt I two ofw.hichl have mentioned alrendy.
Tim also told me .thnt he had paid all or YC payables currunt \vi th a deal he did \Vi~h Wayne Prim (the other
third owncrof vVPT). This turned out nnt to be lmc. In h1dgc Tuckers courtrnom, Bob Sumpter, on Tim's
4
(121 of 387)
Case. 12-35986
08/19J2613
ID. 8148363
DklEr1uy. 55-2
Page. 149 bl 29Jb2 oi 564)
behalf. in April or T\'lay lir'.2008, siakd as ruuc:h as well.

Pages 24/25/26/27 in reference to taxes. I want to talk about in our meeting, as it is too hard to put in all
in this overview.
(a) of Page 27
Jnterestiug thnt they adrni1 here that there was co111mun ity cash flow from l3ig Springs, Big Sky Ridge Ll.C and
Suhrisc Ridge LLC and that Tim took all of thnt money. This was during the time that be was stating that there
was no community t:nsh flow. 1.had to borrow money to jusr live during this time, as I did not get u penny of
temporary spousal suppor1 nbr long term uller. I did not t:nteh this before.
33. of Page 29
This is where Troy Greenfield hnd a "field" day during tlw UCC vs CS and Tim Blixseth. Tim stated on. till!
stand thnt tfo~ "enmcrston0 oft he MSA for him" was rnc rnking over his fiduciary responsibility for any n11d all
of his nctions "in the business that he had run nncl .1 got. II W1)uld be worth :i pbnne Cilll to him on t.hi~ one. Andy
Pntrcn was there as well.. Troy lold 111e thur he clid not rhillk t"ht1t this area of the "f\1JSA would st!llld up as I could
not hold Tim harmless nor rnkc on bis actions if there were fraud and other fhings involvmi. I, ot course, 11ntil
Tim stated that in court, did not think in anyway that the "corni.:rscone" of the MBA for Tim was this.
35. of Page 30
Here is where 1 think we hove a HUGE upside if you cnn find i.n the law where this waiver cannot siand. As I
told you, when Jaffe put together the filing. for spnusal snpporr, it pcndlL:cl out at over 2.0mm per month.
Tim repemcdly said m some point that there was no more community cash flow. We hnve :{incc found out tbnt
this was notlrue. He just kept nil the mo11ey-fo1; himself. Because he was saying there was no cash 11.ow. f hnd
to borrow money to live on, when lhcrc was iri fact fund~ for the community.
If th.e assets wq11ld have been what I was kacl to belit:'ve tJ1cy were AND if Tim had not started his campaign to
"crush nnd destroy hd' ... :.... (it rhen turned into ''keep a ncr her unt iJ she is crashed or dcud") ....... ..! wou Id not
have needed the :>pLn1sul suprorl.
But the fact:> ~ire now clear thnt tht:re wns cash flow tltur l shuuld have received at the lime J was frozen out.
The assets and more oyer the 1iabil itics.thnt I was mi sleuu about, were ~1.tch (or not such as far as asscls go) to
mnintain rny lifestyle, vviiich is lhc ktLer of the family lnw, lei alone. any lifestyle. Jam silting here in a Chapllr
7.
Last year ar about this t.irne, jusl before signing the MS/\, l had manageable liabilities, no money bo1rnwcd
against Porcupine Creek nor Cnsa Captiva. The fact is that Tim knew exactly what he wns doing and what 1
W3S getting myself into, which is why the cornerstone of the iVISA to him. was what it was.
1f I had. known any .of this, J would nol lmvc settled in.lite way I did. I would lwvc been granted.both temp and
Jong-tcnn spousnl support. l woHld not hnve had to coll! i.nue to bo1Tow money to live. I would not haw
borrowed .351mn to get the MSA closed. Remember, of the-'35mm, I personally rn1ly got just owr 1.0111111 of
that". The rest went to Ti Ill or to YC. The part thut went to YC shou Id have been paid back to me, if things there
were as tb0y were presented.
In CA fomily law, ti 25 year marriage witb the income and tax returns thnt we had, wou!J hove given men vc.ry
nice annual income :from spousal support ..
5
(122 of 387)
Case. 12-35986
0811972013
ID. 8148363
DktEr1l1y. 55-2
Page. 150 al 8{573 al 504)
36. - 44. of Pages 30 - 34 You guys arL' going to have to read and tel I me what you think.
Really for you guys ......... it's all the reps and warranties you will have to telJ me what you think.
64. of Page 41
I think this helps ps to jus1 i I)'. i r we ncxd to, \\hy
wear~
Ji ling our motions on. the MSA i11 thc 13K courts in
Montann. don't you?
Okay, l rnost Iikcly gave you more then )'llll wan1Ld and it's not in grcnt order. Sorry. Li;! me know ir
something docs nnt make sense. I think Joe E might be of some help here too.
You guys should also read the Assig111ncnt Of Compuny lnwrcsts Agreement and rhe Assumption Agreement.
There arc scveral'things i11 !he mini se1tlemcnts, like Tim was to keep paying the overhead for J>C, but thal
ended as he said there was no community em;h.llow. Wc.:.11ow know there was, sol a111 not sure where WL~ cnu
fit that in.
Hope !his helps. Edrn
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(123 of 387)
(124 of 387)
'.
Case. 12-35986
IQ. 8148363
08119/2013
DklEr1uy. 55-2
Page. 152 bl B{!it5 oi 504}
..
Scott M. Klopert, CFLS - SB# 192904

Debra Ravden, CFLS - SB# 211453
KLOPERT & RA VDEN, LLP
1613 3 Ventura Boulevard, Suite 1280
Encino, California 91436
Phone: (818) 380-13 00
Fa~:(8l8)380-130l
Attorneys for Petitioner,
ir1.11b~lQ)
SUPERIOR COURT OF CAUFORNI.<

COUITTY OF R1VERSIDE
F'.:13 -4 20~
! . HPlf
EDRA BLIXSETH
6
7
8
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF RIVERSIDE
10
11
In re Marriage of:
12
EDRA BLIXSETH,
CASE NO. RIDIND91152

[Assigned to Judge Sharon J. Waters; Dept. 1]
ORDER AFTER HEARING

Petitioner,
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and
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TIMOTHY BLIXSETH,
DATE:
TIME:
DEPT.
January 14, 2013

8:30 a.m.
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Respondent.
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Respondent's Request for Order filed December 14, 2012 came on for hearing on January
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14, 2013 at 10:00 a.m. in Department 1 of the above-entitled court, the Honorable Sharon J.
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Waters, Judge Presiding. Petitioner was present and was represented by her counsel of record,
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Klopert & Ravden, LLP by Scott M. Klopert and the Law Office of Dennis Holahan by Dennis
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Holahan, via CourtCall. Respondent was present and was represented by his counsel of record,
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Hatch Ray Olsen Sandberg LLP by Christopher J. Conant and Kolodny & Anteau by Stephen A.
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Kolodny.
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The Court, having read the pleadings and hearing argument of counsel, made the
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following orders:
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//
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(125 of 387)
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Res_pondent's Request for Otder filed December 14, 2012 is taken off calendar
without prejudice:: to Respondent re-flling a motion or other request con~eming the matters raised
in bi:i Request for Order in tbe ~ropriate form and in compliance with applicable procedui:es
andforms.
APPROVED AS TO CONFORMING WITII THE COURT'S ORDER:
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~2-
ORDER AFTER HE.ARINO
OAH.OOJ,wed
(126 of 387)
(127 of 387)
Edra D. Blixseth, Volume I
December 14, 2012
or Dennis says you said something, it is or isn't in the
transcript.
A.
okay.
Q.
Do we have copies of this?
MR. CONANT:
MR. STILLMAN:
THE WITNESS:
MR. STILLMAN:
Yes.
Yeah.
Are we done with this?
Q. oh, no, no.
we've got plenty of
that.
MR. HOLAHAN:
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You've got 50 minutes.
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(Whereupon Exhibit 11 was marked for
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identification.)
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MR. STILLMAN:
Next exhibit.
Q. I'm going to put Exhibit 11 in
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front of you.
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A.
um-hum.
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Q.
And -- that's yes?
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A.
I have seen this document before, yes.
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Q.
And the green -- is -- as we've seen before your
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You've seen this document before?
customary way of commenting?
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A.
Edra's comments.
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Q.
Yes.
Edra's comments in green, correct?
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MR. HOLAHAN:
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(Pause.)
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MR. STILLMAN:
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Hold on one second.
why don't I ask a question while
your counsel is -Page 268

YATES COURT REPORTERS
800.669.1866
(128 of 387)

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MR. HOLAHAN:
MR. STILLMAN:
MR. HOLAHAN:
MR. STILLMAN:
(Pause.)
MR. HOLAHAN:
No, hold on a second.
sorry.
I'm sorry.
I just need a minute.
sure.
we're going to object to this exhibit
as work product.
MR. STILLMAN:
MR. HOLAHAN:
okay.
We're going to object to this exhibit
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as work product.
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And it's -- was work product.
I helped the client prepare this document.
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MR. STILLMAN:
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MR. HOLAHAN:
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December 14, 2012
I'm going to object to that.
okay.
For you to make it an exhibit or to
ask any questions.
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MR. STILLMAN:
well, it's already been made an
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exhibit, and the client has said that this is her comments in
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green.
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Dennis.
so her comments are obviously not work product,
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MR. HOLAHAN:
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MR. STILLMAN:
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MR. HOLAHAN:
Hold it.
so that's the way it goes on that.
okay.
This exhibit, to be
to be
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accurate, this exhibit which is called Notes on the MSA,
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including amendments and the mini settlements, Edra's
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comments in green was prepared in conjunction with her
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attorneys, and so as such it is work product and subject to

Page 269
800.669.1866
(129 of 387)
December 14, 2012
the work product privilege.
so we object to it being made an
exhibit and request that you not make an exhibit to this
deposition based on that, and we also don't want her to
answer any questions based on it.
MR. STILLMAN:
well, it's going to be an exhibit.
Any work product to the extent it's even applicable has been
waived.
MR. HOLAHAN:
MR. STILLMAN:
How?
where is it waived?
It's been -- I'm not even going to
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get into it.
It's going to be an exhibit.
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rights to make a motion if you want.
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MR. HOLAHAN:
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MR. STILLMAN:
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Q.
MR. HOLAHAN:
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MR. STILLMAN:
And that's just -- that's it.
she's not going to answer any -Q. Do you remember why that document
was created?
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okay.
But you remember the context, Edra?
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You have your
I'm not talking about the contents, we're talking

about creation now.
We're not talking about the contents.
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Q.
Do you remember why that was created?
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A.
Not exactly.
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MR. COTNER:
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MR. STILLMAN:
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MR. COTNER:
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Excuse me, Phil.

Yeah?
I couldn't quite hear Dennis's
objection.
Page 270
800.669.1866
(130 of 387)
December 14, 2012
Edra D. Blixseth, volume I

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MR. HOLAHAN:
My objection, Dave, is that this
document -- did you hear my full objection?
MR. COTNER:
I did, but I didn't -- you, in your
explanation you described communications between lawyer and
client which I trust you mean you're also objecting on a
privilege basis; is that right?
indicated that in your objection.
MR. HOLAHAN:
work product.
I'm objecting to it on the basis of
You're right.
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MR. COTNER:
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MR. HOLAHAN:
And I'm not sure if you
And attorney-client privilege.
Okay, thank you.

It's communications between Edra and
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her attorneys.
And it's also attorney work product.
so
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we're objecting to this exhibit being made -- this document
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being made an exhibit to this deposition, and I'm instructing
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the client not to answer any questions about it.
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MR. COTNER:
Thanks, Dennis.
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MR. CONANT:
Did you work on the document, Mr.
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Holahan?
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MR. HOLAHAN:
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MR. STILLMAN:
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You're not asking questions here.

You haven't laid any foundation for
why that would be work product at all.
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MR. HOLAHAN:
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MR. STILLMAN:
I don't have to.

sure, what makes this -- this is
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Exhibit 11, and there's now all in green is Edra's
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acknowledged is her comments -- and then
there's
Page 271
800.669.1866
(131 of 387)
December 14, 2012
there's -- I'm -- I only see -- and maybe you can help me
out -- because I'm trying to understand why this would be
work product -- but all I see is Edra's comments about each
one.
MR. HOLAHAN:
MR. STILLMAN:
And we've made our objections.

wait a minute, Dennis, please.
All
I see is Edra's comments and I don't see anything at all in
this document other than Edra's comments.

MR. HOLAHAN:
MR. STILLMAN:
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You don't have to see anything.

Perhaps you can tell me where it is
on this document that you believe to be a work product.
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MR. HOLAHAN:
This document was prepared pursuant
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to communications between Edra and her attorneys.
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work product.
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And it was prepared pursuant to communications between Edra
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and her attorneys.
It came out of my office.
It's also
It's work product.
so it's work product.
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MR. STILLMAN:
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MR. HOLAHAN:
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MR. STILLMAN:
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MR. HOLAHAN:
work product and attorney client
MR. STILLMAN:
Let me just make sure I got it.
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what attorneys?
You?
Me.
Okay.
Edra and you.
privilege.
appreciate your help.
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MR. HOLAHAN:
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MR. STILLMAN:
so you -- you tell Edra to prepare

No.
some analysis, and then she
Page 272
800.669.1866
(132 of 387)

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prepares it.
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December 14, 2012
Right?
MR. HOLAHAN:
I'm not going to go into how -- or
how the document was prepared.
MR. STILLMAN:
well, the reason I go into it is
because it doesn't -- I'm looking at it.
anything at all other than Edra's comments.
just because you tell Edra to write something down -- it
doesn't mean that that becomes protected in any way.
got -- she's writing her analysis there.

MR. HOLAHAN:
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me.
I'm her attorney.

MR. CONANT:
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MR. STILLMAN:
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MR. HOLAHAN:
and her attorneys.
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so I'm not sure
she's
she was communicating her analysis to

It can't be simpler than that.
You don't need to raise your voice,
Mr. Holahan.
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I don't see
Don't worry about.

That's the communication between Edra
It's privileged and it's work product.
MR. STILLMAN:
Well I guess we'll flag that for
another day.
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All right, let's get onto the next paragraph then.
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MR. COTNER:
Before we move on, Phil, what's the
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status of that exhibit with regard to making it part of the
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record?
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MR. STILLMAN:
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Exhibit 11.
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record.
well, it's in the record.
It's
And Dennis is objecting to it being in the
Page 273
800.669.1866
(133 of 387)

MR. HOLAHAN:
December 14, 2012
I'm objecting to it being made an
exhibit as attorney-client communication and as an attorney
work product.
MR. COTNER:
I understand all that.
so Phil, is it
my understanding that we are not attaching Exhibit 11 to the
transcript?
MR. STILLMAN:
transcript.
It's a marked and authenticated exhibit.
MR. HOLAHAN:
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No, we are attaching it to the
MR. STILLMAN:
who authenticated it?

Edra and now you.
so it's now, any
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privilege, to the extent there was one, has been long since
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waived.
so -MR. HOLAHAN:
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And how is it waived?
why don't you
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tell us how it was waived if you're going to attach it as an
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exhibit.
MR. STILLMAN:
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exhibit.
MR. HOLAHAN:
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MR. STILLMAN:
MR. HOLAHAN:
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MR. STILLMAN:
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HOW is the
Dennis, I'm not going to get into an
argument with you.
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24
How is it waived?
privilege waived if this is the first time
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It is going to be attached as an
why not?
This is a serious matter.
I agree, and I am -- and so is this
lawsuit.
MR. HOLAHAN:
when was it waived?
It's a simple
Page 274
800.669.1866
(134 of 387)

1
December 14, 2012
question.
MR. STILLMAN:
Dennis, I'm not answering your
questions.
I'm going to continue with the examination
because I only have 45 minutes left today.
MR. HOLAHAN:
MR. STILLMAN:
okay, let's go.

If you want to argue about it I'll
argue
we'll argue and argue and use up the time and then
we'll
that will be it and we'll come back again another
day.
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MR. HOLAHAN:
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MR. STILLMAN:
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okay.
so I'm trying to get as much done as
I can.
MR. COTNER:
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Phil?
Let me make a suggestion that
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Exhibit 11 be placed under seal as part of the record at
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least until we can determine if some kind of privilege
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protects it from being part of the public record, and if that
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can't be agreed upon then I would request that the court
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reporter not publish the exhibits until we have an
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opportunity to present the issue to the court.

MR. CONANT:
Mr. Holahan, please place the exhibit
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MR. COTNER:
I'm sorry?
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MR. HOLAHAN:
24
MR. CONANT:
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MR. STILLMAN:
20
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back.
Do you have a copy of this for me?

Yeah, we have a copy.
we didn't give you a copy?
Page 275
800.669.1866
(135 of 387)

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MR. CONANT:
we gave you a black and white copy.
You have a copy.
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December 14, 2012
MR. STILLMAN:
copy.
I'm sorry.
oh, I've got the black and white
Here, you can have my copy.
MR. HOLAHAN:
MR. STILLMAN:
There you go.
Thank you.
Q. All right.
So now let's talk
about misrepresentations made during the divorce proceedings.
Let's just go right to let's say paragraph 24.

Have you had a chance to read 24?
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A.
Three lines.
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Q.
okay.
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A.
Do you want me to read the whole thing or do you
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want to just start asking questions?
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Q.
I'll ask questions unless you feel the need to read
the whole paragraph.
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(Pause.)
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A.
okay.
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Q.
well, we've already discussed, haven't we, this
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morning, that as of April 2008 you knew that it was serious
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financial problems with the Yellowstone club, correct?
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A.
correct.
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Q.
And so what representations were you relying on
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that were regarding BGI, the Yellowstone club and other
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assets and liabilities under his control when negotiating the
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MSA?
Page 276
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(137 of 387)
Cas:ea.se12. -SS_,'.9B B D6JTu/ 2D3
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09-00014-RBK Doc#: 714-1
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Filed: 12/19/12 Entered: 12/19/12 16:32:42 Page 1of10
CHRISTOPHER J. CONANT
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Cal. Bar No. 244597

730 1i 11 Street, Suite 200
Denver, Colorado 80202
Telephone: (303) 298-1800
Facsimile: (303) 298-1804
Email: cconant@conantlawyers.com
Attorney for Timothy L. Blixseth
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SUPERIOR COURT OF CALIFORNIA FOR TIIE COUNTY OF RIVERSIDE

In re the Marriage of:
Case No. RIDIND91152

[Reassigned to Dept. 10 from Dept. F501]
Petitioner: Plaintiff
and
Respondent: Timothy L. Blixseth
DECLARATION OF DENNIS L.
MONTGOMERY IN SUPPORT OF
RESPONDENT'S MOTION FOR
SANCTIONS AND TO SHOW CAUSE
Judge: Sharon J. Waters

Hearing:
Time:
Dept. 10
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DECLARATION OF DENNIS L. MONTGOMERY
(138 of 387)
Case. 12-35986
ID. 8148363
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08/12/2013
ID: 8739867
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09-00014-RBK Doc#: 714-1 Filed: 12/19/12 Entered: 12/19/12 16:32:42 Page 2of10
I, Dennis L. Montgomery do hereby declare under penalty of perjury of the laws ofthe
State of Washington as follows:
1.
In approximately 2006, I began working with Edra D. Blixseth to develop software
technology for her and her companies. I worked for her in numerous capacities. At times I was
an employee of one of her companies Blxware LLC or Opspring LLC. I was involved in various
"partnership" activities with her over the last 6 years.
2.
As Ms. Blixseth' s employee and associate I was responsible for developing
software technology. Ms. Blixseth's role in our partnership was to provide funding for our
operations and to bring in customers to purchase/license the software that that was being
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developed for her business. Because of Ms. Blixseth's enormous wealth, Ms. Blixseth had
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contacts at the highest levels of business and the U.S. Government to whom Ms. Blixseth could
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sell/license my software technology. Ms. Blixseth has been trying to sell the Blxware technology
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before, during, and after her bankruptcy.
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3.
From approxiIIl.(ltely December, 2011 through June of2012, I and others worked
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feverishly for Ms. Blixseth through a company called PCI to develop the software for the needs of
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the customers that Ms. Blixseth bad procured. Ms. Blixseth had representatives from the US
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Government come to our building in March and April of2012. At that meeting the US
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Government told Ms. Blixseth they could move quickly into contract negotiations. Ms. Blixseth
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told the US govenunent she bad invested over $15 million into the technology and was looking
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for a large initial payment, and felt it was best to contract with a third party for the licensing of
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the technology. Finally, in April of2012, I delivered much, but not all, of the source code that I
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bad updated and developed for Ms. Blixseth to her and her customers as they bad demanded
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access to the source code so that they could ''validate" it and ensure that it performed as
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represented. Although I was reluctant to deliver the source code to these customers due to my
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concern that they could then abscond with it once it was in their possession, Ms. Blixseth had
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convinced me that I could 1rust her and these customers. Moreover, because Ms. Blixseth had
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promised to share equally in all proceeds from the source code with me, and because that payout
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was represented to be approximately $50-100 million, I believed the payout outweighed any risk.
(139 of 387)
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Unfortunately my fears were confinned. Shortly after I delivered part of (but not all) the source
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code to Ms. Blixseth's customers; I stopped receiving payments and regular communications
from Ms. Blixseth and her customers.
4.
Besides these business dealings, Thave personal knowledge that Ms. Blixseth paid
individuals to hack or otherwise intercept the email communication of Tim Blixseth and his
lawyers. I have personal .knowledge that Ms. Blixseth provided Mr. Blixseth's and his lawyers'
email communications to Paul Moore, Marc Kirschner, who is the Trustee for the Yellowstone
Club Liquidating Trust, and lawyers representing Credit Suisse.
5.
Ms. Blixseth also informed me over the last 3 years, on many occasions that "she
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had to live and work underground". Ms. Blixseth told me that she didn't want the IRS, Montana
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or California trucing authorities, or Tim Blixseth to fmd out how she is being compensated. Ms.
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Blixseth told me that money was being fi.mneled to her through Sam Byrne, Mike Meldman,
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Dennis Holahan, Pat Yarborough, FF&E Liquidators, and Bob Brown "Red Baron" auction house
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and others to avoid IRS and state tax authority detection of her assets and income.
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6.
Ms. Blixseth told me she was the owner and manager ofFF&E Liquidators, lnc.
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Ms. Blixscth told me that FF&E was just a front company that she used to move money through
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so as to better conceal it from numerous parties. Ms. Blixseth also told me FF&E was owned and
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managed by her, but was operated by Pat Yarborough and her attorney Dennis Holahan. Ms.
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Blixseth told me that Dennis Holahan would make cash deposits from his attorney client account
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into the FF&E account or deliver cash directly to her.
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7.
I have seen Ms. Blixseth receive envelopes containing $9,000 in cash from Dennis
Holahan on several occasions in both 2011 and 2012.
8.
I and others were compensated by Ms. Blixseth for work in 2011 and 20 l 2 in the
following manner:
(a)
Ms. Blixseth or her agents (which I understand to be Dennis Holahan, Pat
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Yarborough or Olivia Scalia) would pay me or others by depositing cash or
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checks into our personal accounts.
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(b)
Ms. Blixseth or her agents would pay me or others through another

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company by depositing cash or checks into PCI bank account.
(c)
Ms. Blixseth or her attorney, Dennis Holahan, or his office staff, would pay
me or others by depositing cash or by wiring money from his Dennis
Holahan law office account directly into PCI's company bank account.
(d)
Ms. Blix:seth or her agents would pay me or others by depositing cash or
checks written by her company called FF&E Liquidators, Inc., into PCI's
bank account.
(e)
Ms. Blixseth or her agents 'would pay me or others by depositing cash or

checks written by her son
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(t)
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Mathew Crocker or his girl.friend Becky Barnett into PC! or our personal
bank accounts.
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(g)
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Ms. Blixseth or her agents would pay me or others by endorsing checks by
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Shared Staffing Services, LLC, and depositing then into PCI's bank
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account.
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9.
To pay for PCI's rent and electric bill, Ms. Blixseth on at least two occasion wired
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funds directly into the account of PCl's landlord or the electric company. This is reflected in an
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email exchange between me and Ms. Blixseth, a true and correct copy of which is attached hereto
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as Exhibit 1. For the Court's reference, my email address is dennis@ncoder.net and Ms.
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Blixseth's email addresses are learg2@aol.com and edrablx@aol.com. Ms. Blixseth paid for
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Pers commercial lease because it was through PCI's office that I would develop software for her
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and because Ms. Blixseth ran her own business operations out of PCI's office.
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IO.
During the six: years in which I have worked with and for Ms. Blixseth, we shared
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office space and Ms. Blixseth would conduct her personal and non-software business in our
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shared office. Because I bad software and teclmical expertise that Ms. Blixseth lacked and
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because I was readily accessible to Ms. Blixseth, she had me establish and maintain written
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documents, numerous computers, network servers and hard drives which not only contained the
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files associated with her businesses, but also Ms. Blixseth's personal files and emails. Ms.
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Blixseth or her assistant would provide me on occasions with removable electronic storage
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DECLARATION OF DENNIS L MONTGOMERY
(141 of 387)
Casti. 12-35986
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devices (i.e., thumb drives) which contained her personal files, and on occasion Ms. Blixseth
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would give me access to her email accounts.
11.
For reasons relating to my various activities on her behalf, Ms. Blixseth would
often forward to me email conununications between her and other attorneys. Ms. Blixseth would
want me to read the communications and give her my thoughts regarding them.
12.
Attached hereto as Exhibit 2 are true and correct copies of bank records that I
downloaded from the online banking feature of PCI's bank account at Bank of America. These
records reflect numerous checks and other deposits to PCI from FF&E Liquidators, Inc and Edra
Blixseth.
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13.
On December 9 and 15, 201 l Ms. Blixseth invited me and others to her apartment
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in Beverly Hills. I ae<:epted the invitation. Ms. Blixseth's apartment is located at 202 N.
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Crescent Drive, Unit 1, Beverly Hills, CA, which places her residence in one of the more "tony"
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neighborhoods of Beverly Hills, just blocks away from Rodeo Drive. While I was at Ms.
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Blixsetb's apartment, I observed a plethora of fine art, antiques, and furniture. I was so amazed
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by the lavishness of her furnishings, that I took numerous pictures of the interior of her apartment.
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Attached hereto as E:i:hibit 3 is a collection of true and correct copies of the pictures that I took
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on December 9 and 15, 2011.
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14.
While I was there at Ms. Blixseth' s apartment in December 2011, Ms. Blixseth
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took me upstairs and showed me over $250,000 in cash in envelopes. Ms. Blixseth told me she
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had received them from Dennis Holahan. In January 2012, Ms. Blixseth gave me three of those
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envelopes with contained $1 Sk in cash.
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15.
Ms. Blixseth told me she received millions of dollars in furniture, art work, and
23
antiques from Sam Byrne and or his company while she was in bankruptcy as well as after her
24
discharge from bankruptcy. Ms. Blixseth told me the items being sold were from her warehouses
25
in California and the auctions were being "staged." Ms. Blixseth told me that she received an
26
interest in these assets in return for her "helping" Mr. Byrne. Ms. Blixseth told me that these
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"staged" auctions took place in 2010-2012 at Red Baron auction house in Atlanta, Georgia and
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King Galleries. In particular, Ms. Blixseth informed me that because she was in bankruptcy and
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because she was attempting to hide her partnership relationship with CrossHarbor Capital
2
Partners LLC from Mr. Blixseth, her bankruptcy trustee and the bankruptcy court, she had to
devise a way of having CrossHarbor (Sam Byrne) and Discovery Land Company (Mike
Meldman) pay her millions of dollars without the transactions being traceable to them. Ms.
Blixseth told me that do this, CrossHarbor took possession of all the furniture, art and furnishings
located in Porcupine Creek through its purported foreclosure ofits security interests in that
personal property, then after CrossHarbor foreclosed, it "consulted" with Edra Blixseth to sell that
furniture for it or its agents. It appears th.is "consultant" relationship was simply a charade for a
"kiting" scheme whereby Edra Blixseth would sell the Porcupine Creek personal property at
l0
auction for CrossHarbor or its agents but then CrossHarbor, through straw buyers, would overbid
11
at that auction and purchase its own assets for amounts above their auction market value. As a
12
result of Cross Harbor's purchases at these auctions, its money would flow to Edra Blixseth or her
I3
entities, thereby providing Edra B lixseth with significant amounts of money in furtherance of its
14
partnership with her, which partnership she was attempting to hide and this "kiting" scheme is
15
how she concealed that relationship. Moreover, once it purchased its own Porcupine Creek
16
personal property through the auctions that Edra would arrange, it would then give that personal
17
property back to Ms. Blixseth to either cycle through the "kiting" scheme again or for her to keep
18
for herself. See "Phase 2" in Exhibit 4 (I received Exhibit 4 from Olivia Scalia's computer while
19
repairing her machine under her instruction. The hard drive repair work required me to copy her
20
machine to ensure no information was lost in case the repah failed and the hard drive crashed).
21
16.
Ms. Blixseth told me on several occasions she would contract items that she
22
received from Sam Byrne to be sold with Mr. Bob Brown (the owner ofRed Baron). Ms.
23
Blixseth told me Mr. Byme and or his agents would purchase the very same items that he gave to
24
her to sell and that his purchase price for these items were sold at higher than nonnal prices, and
25
that the money would be funnel back to Ms. Blixseth. Ms. Blixseth told me that after the auctions
26
Mr. Byrne and or his agents would return some of the very same assets that it bought at these
27
auctions to her so that she could keep these items or try to sell them again. In the last auction in
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the summer of2012, Red Baron sold many of Ms. Blixseth's valuable antiques and artwork that I
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have observed in the past. Some of these items Ms. Blixseth had told me she had already sold to
Mr. Byrne in previous auctions and that he had given them back to her and that she was reselling
them. The items that Sam Byrne had given to Edra Blixseth to sell in the scheme described above
crune from her former personal residence known as Porcupine Creek.
17.
In the past, Ms. Blixseth told me the majority of those funds were either funneled
through FF&E or through Mr. Holaban's attorney client trust account and ultimately to back to
Ms. Blixseth.
8
9
18.
Ms. Blixseth employed Olivia Scalia and her son Mathew Crocker to manage and
help sell many of these assets also that were stored at O'Neil storage located in Santa Ana,
10
California. Ms. Blixseth told me that O'Neil storage was not in her name, but in CrossHarbor
11
Capital's name to avoid any chance of a subpoena or a search warrant issued on those storage
12
units.
13
19.
Ms. Blixseth asked me to falsify documents that would substantiate ber claims that
14
Mike J. Flynn had acted as her attorney, I refused to do so because I had in my possession many
15
emails that had been copied to me and written by Ms. Blixseth that contradicted those statements.
16
J7
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20.
The emails that contradict Ms. Blixseth's claims that Mr. Flynn was her attorney
are as follows:
(a)
Attached hereto as Exhibit 5 is a true and correct copy of a July 9, 2007
19
email that Ms. Blixseth sent to me, among others (including her attorney
20
Deborah Klar), concerning Michael J. Flynn.
21
(b)
Attached here to as Exhibit 6 is a true and correct copy of a July 23, 2007
22
email that Ms. Blixseth sent to me, among others (including her attorney
23
Deborah Klar), concerning Michael J. Flynn.
24
(c)
Attached here to as Exhibit 7 is a true and correct copy of an August 18,
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2007 erruri.1 that Ms. Blixseth sent to me, among others {including her
26
attorney Deborah Klar), concerning Michael J. Flynn.
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(d)
Attached here to as Exhibit 8 is a true and correct copy of an October 20,

2007 email that Ms. Blixseth sent to me, among others (including her
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attorney Deborah Klar), concerning Michael J. Flynn.
21.
I was served with a subpoena by attorney Mike J. Flynn to produce any and all
documents and computer records relating to Ms. Blixseth. I turned over docwnents, computers
and hard drives to a third party expert as directed to do so.
5
6
22.
The following are true and correct copies of some of the documents contained on
the computers and hard drives that I produced in response to Mr. Flynn's subpoena.
(a)
Attached hereto as Exhibit 9 is a true and correct copy of a document titled
"My Dearest Jack" that I found on Ms. Blixseth's Mac computer that she
left in my custody and control in 2011.
IO
(b)
Attached hereto as Exhibit 10 is a true and correct copy of a "bullets
ll
point" memo that Ms. Blixsethprepared for her attorney Mr. Holahan in or
12
around July 2011. Ms. Blixseth stored this document in electronic format
13
on a thumb drive that she then provided to me with no restrictions on
14
access.
(c)
15
Attached hereto as Exhibit 11 is a true and correct copy of a document
16
titled ''Notes on the MSA" that I found on Ms. Blixseth's Mac computer
17
that she left in my custody and control in 2011.
18
23.
Attached as Exhibit 12 hereto, is a true and correct copy of the picture I took of a
19
diagram on a whiteboard located within PCI's offices on January 25, 2012. Along the top of this
20
email are the words "tell the truth as long as u [sic) can". I personally observed Ms. Blixseth
21
write those words on the whiteboard.
22
24.
In the six: years I was involved with Edra Blixseth in Opspring, Blxware, or any of
23
the technology companies, Edra insisted on keeping Tim Blixseth in the dark, and isolated from
24
any knowledge, cost, value or potential income from those companies.
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I declare under penalty of perjury of the laws of the State of Washington that the
foregoing is true and correct.
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4
Dated:
December 13, 2012
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Michael J. Flynn
PO Box690
6125 El Tordo
Rancho Santa Fe, CA 92067
Suite 240
One Center Plaza,
Boston MA 02108
Tel: 858 775 7624
Fax: 858 759 0711
E-Mail: mike@mjfesq.com
8
9
Creditor in pro per,
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11
UNITED STATES BANKRUPTCY COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
RIVERSIDE BRANCH .
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IN RE:
) CASE NO.: 09-24322-BB

)
) Adversary Proc. No. _ _ _ __
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DENNIS MONTGOMERY and BRENDA

MONTGOMERY
) COMPLAINT TO:
) 1. DENY DEBTORS' DISCHARGE
) PURSUANT TO 11 U.S.C. 727(A)(2);
Debtors.
) 2. DENY DEBTOR'S DISCHARGE
_ _ _ _ _ _ _ _ _ _ _ _ _ _ ) PURSUANT TO 11 U.S.C. 727(A)(3)-(5);
) 3. DETERMINE NONDISCHARGEABILITY OF
MICHAEL J. FLYNN, an individual,
) DEBT FOR ACTUAL FRAUD PURSUANT TO
) 11 U.S.C. 523(A)(2);
Plaintiff,
) 4. DETERMINE NONDISCHARGEABILITY OF
v.
~ DEBT PURSUANT TO 11U.S.C.523(A)(6)
DENNIS MONTGOMERY, BRENDA
MONTGOMERY
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)
)
Defendants.
)
)
)
~-~--------~-~)
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2
3
CREDITOR MICHAEL J. FLYNN (hereinafter "Flynn") in propria persona, hereby files this
Complaint to Detennine Non-Dischargeability of Debtors and their Debts on behalf of himself and all
4
5
creditors, and for other claims, and in support thereof alleges as follows:
I.
JURISDICTION AND VENUE
7
8
9
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1.
On or about June 26, 2009 (the "Petition Date") the defendants Dennis Montgomery
and Brenda Montgomery filed a voluntary petition for relief (the "Chapter 7 Case") under Chapter 7,
Title 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States
11
Bankruptcy Court for the Central District of California, Riverside Branch.
12
13
2.
This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. 1334. and 28
14
U.S.C. 157 (a).
15
3.
16
17
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This adversary proceeding is a core proceeding under pursuant to 28 U.S.C. 157
(b)(2)(1).
4.
Venue of the Chapter 7 Case and of this adversary proceeding is proper in this district
pursuant to 28 U.S.C. 1408 and 1409.
19
20
21
5.
This adversary proceeding is commenced pursuant to Fed. R. Bank. P. 7001 (6) to
determine the dlschargeability of Debtors and of debts owed to Flynn and other creditors.
22
II.
23
PARTIES
24
6.
Michael J. Flynn is an individual and judgement creditor of the defendants with a
25
California address of PO Box 690, 6125 El Tordo, Rancho Santa Fe, CA 92067.
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7.
Defendant Debtors are natural persons residing at 6 Toscana Way, Rancho Mirage,
CA 92270.
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Ill.
FACTUAL BACKGROUND
8.
Michael Flynn is an attorney licensed in Massachusetts and a judgment creditor of the
debtors by virtue of the breach of the Debtors' contractual obligation to pay attorney's fees in excess
of $628,000 due pre-petition, as well as over $200,000 in sanctions imposed on Dennis Montgomery
and his lawyers for willful and malicious misconduct in Nevada litigation in which Mr. Flynn had
previously represented the Debtors Dennis Montgomery and Brenda Montgomery. See Montgomery
10
v eTreppid Technologies, 2009 U.S. Dist. LEXIS 35543, (D.Nev. 2009, the "Sanctions Order").
11
9.
12
Pursuant to said Sanctions Order, Montgomery has been referred to the U. S. Attorney
13
In Nevada for perjury. The Sanctions Order is now under appeal to the District Judge. Montgomery
14
perjured himself in connection with multiple false statements under oath in the Nevada cases,
15
Including but not limited to the matters recited in the Sanctions Order. Mr. Flynn withdrew from the
16
Nevada cases in June -August, 2007 when he discovered Montgomery's multiple perjuries and
17
frauds.
18
10.
Thereafter, the Los Angeles law firm of Liner, Yankelevitz, Sunshine & Regenstreif,
19
20
also then representing Edra Blixseth, Montgomery's partner replaced Flynn. The Liner law firm took
21
over the representation of Montgomery knowing and in full possession of conclusive evidence that
22
Montgomery was an habitual perjurer. Id. Montgomery continued his pattern of lying under oath
23
throughout his two years of representation by the Liner firm; and again at his recent 341 (a)
24
Meeting of Creditors on September 16, 2009.
25
11.
The Instant Chapter 7 petition was filed on June 26,2009, the day on which Dennis
26
27
28
Montgomery was ordered to appear in the Nevada Federal District Court for his Debtor's
Examination in connection with the above stated case, Montgomery v e Treppid Technologies,
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United States District Court for the District of Nevada, Case No. 06-cv-00056 (PMP, VPC).
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12.
On that date, a Motion for Contempt and to Compel Production of previously ordered
documents was pending before the Nevada Federal Court (See Doc. # 's 1061, 1075 and 1076 } for
4
Montgomery's failure to comply with previous court orders requiring the production of his financial
5
records. Montgomery had intentionally and willfully concealed his financial records by, among other
things, intentionally deleting specific pages of specific bank records reflecting cancelled checks,
which would establish where milllons of dollars of money paid to him by Edra Blixseth had been
hidden, including payments to his children. Id. The incomplete records Montgomery did produce
10
were contained on an electronic disc consisting of approximately 900 pages in his possession at that
11
time and at the present time. In his 341(a) Meeting of Creditors, Montgomery denied possession of
12
13
his financial records.
13.
14
The records produced in the Nevada cases, coupled with Flynn's experiences with
15
Montgomery as his former attorney establish an intent to hide or conceal assets. The records reveal
16
that Montgomery purchased millions of dollars in bank checks between April and December, 2006
17
18
from monies paid to him by Edra Blixseth, his partner in a scheme to defraud the U.S. government
based on Montgomery's fraudulent software technology, while Montgomery was the subject of a
19
20
21
federal criminal investigation, and also a defendant in the eTreppid Nevada litigation in which he
subsequently confessed a $26.5 million dollar judgments. The concealed cancelled checks and
22
other court ordered documents would have established where the said millions of dollars have been
23
hidden.
24
25
14.
To date, Montgomery has not produced said records, and a Rule 2004 exam motion is
now pending. At his 341(a) Meeting of Creditors on September 16, 2009, Montgomery falsely
26
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stated that he did not have possession of his records. This is false. The emails sent to Flynn by
Montgomery's lawyers in June, 2009 relating to the Motion for Contempt plainly reveal that
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Montgomery was In possession of his financial records and had prepared the electronic disc that
was produced. Montgomery later claimed on his schedules that he had $36.5 million in claims
against the same lawyers, who he now claims have all of his records which prevented him from
5
6
7
8
9
10
testifying at his 341 (a) Meeting of Creditors hearing. That testimony is part of a pattern of
Montgomery lying under oath. Additionally, based upon Flynn's experience with Montgomery,
Montgomery's modus operandi is to conceal documents and money.
15.
The Nevada Motion for Contempt and to Compel, and for the Debtor Examination was
stayed on the morning of June 26, 2009 as a result of Montgomery's filing his Chapter 7 Case. The
filing of said Chapter 7 petition constituted an Intentional fraud to conceal assets and avoid
11
production of the concealed financial records in violation of 11 U.S.C. 727. It was also designed to
12
13
stay the pending Sanctfons Order appeal as to Montgomery. In addition, Montgomery's claims
14
against his attorney, Deborah Klar and the Liner firm and the location of his assets are intermingled
15
and interrelated in connection with his relationship with Edra Blixseth who purchased his copyrights,
16
financed his defense by the Liner law firm in multiple cases including the Nevada litigation, and paid
17
Montgomery approximately $5.7 million between April, 2006 and the present. Montgomery now
18
claims that said copyrights belong to him and not to Blixseth and constitute a $10 million asset in
19
20
21
his estate. Blixseth claims she owns the disputed technology. The Liner law firm has had throughout
the dual representation of Montgomery and Blixseth an irreconcilable conflict between them. That
22
conflict was conclusively adjudicated when the Liner firm suborned, induced, and /or aided and
23
abetted Montgomery's perjury. See Sanctions Order, supra.
24
25
16.
The ownership of Montgomery's copyright assets that he contends are valued at $10
million, as well as his claims against the United States are riddled with fraud. Edra Blixseth
26
purportedly purchased all of Montgomery's copyrights in April, 2006, in consideration of the payment
27
28
to him of $3.3 million and a salary of $100,000 per month. This sale was later confirmed by the
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Liner firm again in 2007 when Flynn withdrew from the representation of Montgomery; and while the
Liner firm was representing both Montgomery and Blixseth. U
17.
pon information and belief, Edra Bllxseth has aided and abetted Montgomery in the
5
6
evasion of federal taxes, in an attempted fraud on the United States government, and In the potential
concealment of assets in this bankruptcy. Montgomery is currently under indictment in Nevada for
criminal fraud in connection with obtaining credit from casinos and cashing bad checks. As recited
herein, Montgomery's schemes of fraud include a three year pattern of obtaining cash by various
fraudulent means and concealing it.
10
18.
Montgomery fraudulently procured the services of Flynn and other lawyers by means
11
of the following
misrepre~entations
in the specific context of the following facts.
12
13
19.
On or about September, 2005 - March, 2006, Edra Blixseth, Michael Sandoval and
14
Dennis Montgomery discussed and.then agreed to take software technology that then belonged
15
to eTreppid Technologies in Reno, Nevada, where Montgomery then worked. Montgomery
16
claimed that the technology purported to intercept al-Qaeda communications.
17
18
20.
The evidence reported by the FBI and unsealed on September, 17 2007 by the
Nevada District Court strongly suggests fraud by Montgomery In his implementation of fake
19
20
21
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23
24
25
26
testing procedures for his purported technology in an attempt to validate fraudulently represented
technology to the U.S. government. Montgomery and Sandoval then sold the fraudulently
represented technology to Edra Blixseth.
21.
Although Ms. Blixseth had knowledge of the fraud by January - April, 2007, she
continued to try to sell it to the government after knowing that the technology itself was fraudulent
and that Montgomery had a long history of fraud and perjury.
22.
As of September - December, 2005, Montgomery was a part owner and employee
27
28
of eTreppid; but was then in the process of being investigated and exposed by eTreppid
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employees, software engineers, and the FBI in connection with the creation of fraudulent
software, and the potential defrauding of the U.S. Government. These facts are contained in FBI
reports prepared in connection with a search and seizure of Montgomery's house and storage
5
6
7
8
10
units on file In the Nevada District Court. See United States District Court for the District of
Nevada, search and seizure proceedings in the case of In Re Buckthom, 3:06-cv-263 (PMP,
VPC).
23.
Between September, 2005 and January 18, 2006, Montgomery was then planning
and actively engaged in taking eTreppid's technology with him to sell it to Sandoval and Edra
Blixseth. Having been exposed in November, 2005 for fraudulent conduct involving fake testing
11
procedures at eTreppid in a scheme to defraud the U.S. government, on or about January 18,
12
13
2006, Montgomery departed eTreppid. Montgomery and Sandoval convinced Ms. Blixseth that
14
the technology was legitimate, and that the Government had appropriated $100 Million Dollars in
15
a "black budget" to buy it. During the same time frame, Sandoval's chief scientist had advised
16
Sandoval that Montgomery was misrepresenting his technology; and that it didn't exist.
17
18
Etrepped's software creators had developed some media compression software which
Montgomery had taken; but the purported al-Qaeda intercepts were, in fact, fraudulent.
19
20
21
24.
While knowing that Montgomery and Sandoval were scheming to take whatever
technology eTreppid then possessed which would result in the purported payment of $100 Million
22
Dollars, Ms. Bfixseth agreed with Montgomery and Sandoval to finance new companies, first
23
Azimyth, LLC, and X-Pattems LLC, then -Opspring, LLC , later Blxware. Ms. Blixseth
24
represented to Montgomery, Sandoval and others that her "connections to the Bush
25
Administration would result in the payment of the $100 Million Dollars to them. Sandoval falsely
26
represented to the government during the search proceedings and later to plaintiff. that he had
27
28
"90% of the technology" before Montgomery became an employee of Opsprings in early April,
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2006. Ms. Blixseth confirmed these false facts to the Bush administration.
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25.
On January 18, 2006, Montgomery departed eTreppid and took the software with
26.
On January 18, 2006, eTreppid sued Montgomery in the Reno Superior Court
him.
5
6
claiming Montgomery stole the technology, deleted or destroyed it off all eTreppid computers,
and requested a preliminary injunction to prevent Montgomery from using, conveying, borrowing
against, or even discussing the technology. On January 23, 2006, plaintiff met and spoke with
Montgomery for the first time. Shortly thereafter, Montgomery retained plaintiff. For the ensuing
10
11
18 months, Montgomery spun the same web oflles and fraud to plaintiff that he spun to the
United States government and to the courts.
12
13
27.
On February 7, 2006, the Reno Superior Court conducted a 12 hour evidentiary
14
hearing in which Montgomery testified under oath that he didn't take any technology with him
15
when he left; that the technology self-destructed pursuant to government requested security
16
protocols; that the technology derived from his copyrights which had never been conveyed to
17
eTreppid;; and that it was used in "top-secret" government programs.
18
28.
Virtually everything Montgomery said under oath was false. Montgomery made the
19
20
21
same false representations to Flynn and his other four lawyers. The case was removed to the
Nevada Federal Court. The technology now claimed on his schedules having a value of $10
22
million dollars, and the purported "source codes" for the technology is the subject of the
23
foregoing false testimony; and was the subject of intensive litigation in the Nevada cases.
24
Montgomery conveyed the fake technology to Blxware in April, 2006, in consideration of over
25
26
$3.3 million dollars which he immediately turned into cash.

29.
The Nevada Federal Court entered multiple orders for Montgomery to produce the
27
28
"source codes." He and Bllxseth defied the orders. Montgomery defied the orders because the
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"source codes" would demonstrate his fraud. After months of evidentiary hearings for contempt,
the Nevada District Court imposed sanctions against Montgomery, Blixseth, and Blxware at the
rate of $2500 per day in July, 2008 until Montgomery produced the "source codes." He never
4
5
did.
30.
Montgomery and Edra Bfixseth then confessed $26.5 million in judgments to the
Trepp parties in order to circumvent the contempt sanctions and to conceal the fraud.
Montgomery had in fact taken from eTreppid whatever technology did exist. In a September 5,
2008 hearing involving Montgomery's false accusations against the FBI, the Liner firm was
10
compelled to admit that Montgomery made false statements under oath - they used the term
11
"mistaken.D In the subsequent settlement with eTreppid on or about September 17, 2008,
12
13
Montgomery admitted to other falsehoods, including his fabrication of emails implicating Trepp
14
and the Governor of Nevada in a bribery scheme to obtain government contracts. Montgomery
15
made numerous perjured statements in false declarations in order to defeat the search by the
16
FBI and to obstruct discovery in the Nevada cases. The FBI involvement arose out of
17
Montgomery's alleged theft of the software from eT reppld.
18
31.
On March 1, 2006, the FBI raided Montgomery's home seeking the software taken
19
20
21
from eTreppid, Including the "source codes;" and "classified information" Montgomery took with
him. They seized his computers and other materials. On March 3, 2006, the FBI raided
22
Montgomery's storage facilities seizing extensive electronic media, including hard drives, dvd's
23
and cd's. But the bulk of the technology and other material taken from eTreppid Montgomery had
24
concealed with a friend of his daughter and future {now present) son-in-law, Istvan Burgyan.
25
Burgyan and his wife are critical witnesses in these bankruptcy proceedings.
26
32.
Throughout the remainder of March, 2006, Sandoval negotiated and concluded a
27
28
deaf with Montgomery and Edra Blixseth, resulting in the creation of Opspring: and Montgomery's
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agreement to convey all of his technology to Opspring for $3.3 Million in "loans" and $100,000
per month in salary. As Montgomery received the purported "loan" monies he purchased bank
checks for the purpose of breaking the chain of bank transfers and checks which would reveal
5
6
7
8
10
where he ultimately deposited the money. Montgomery then cashed the bank checks in various
casinos and purchased chips later converted to cash with "street brokers", all as part of his
scheme to conceal assets.
33.
Between January, 2006 and April, 2007, when Sandoval, Montgomery and
Blixseth attempted to obtain the $100 million "black budget", Flynn was representing
Montgomery but did NOT know that the technology was fraudulent, that Montgomery was a
11
pathological liar, that Montgomery had in fact taken the technology from eTreppid, that both
12
13
Montgomery and Sandoval had a history of trying to market and sell fraudulent software
14
technology, and that Montgomery was lying about how much money he had received from
15
Blixseth and what he was doing with it. These facts became exposed In June, 2007 when Mr.
16
Flynn withdrew. Just as Montgomery had continuously lied to various agencies of the federal
17
18
government and convinced them of the legitimacy of his technology, he similarly convinced his
lawyers. But the representations were fraudulent.
19
20
34.
Between January, 2006 and June, 2007, Montgomery continuously requested Flynn
21
and other lawyers to provide him with legal services based on the fraudulent representations
22
Involving the purported software; and fraudulent representations regarding his ability to pay for
23
the services; and Montgomery repeatedly made fraudulent representations relating to his
24
concealment of monies he received from Edra Blixseth.
25
35.
Between April, 2006 and December, 2006 in Rancho Mirage, California, in Reno,
26
Nevada, in person, in documents, in declarations and emails, Montgomery vigorously
27
28
represented, claimed, and stated to Flynn the following facts: that the "Black Budget" al Qaeda
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technology was exclusively created, developed, owned and used solely by him at eTreppid; that
the al Qaeda intercepts and decoding were vital to national security; that the source codes for it
had never been on the premises of eTreppid; that he had never taken any of the eTreppid source
5
6
code from its premises; and that as a co-owner of eTreppid his possession of certain hard drives
containing emails and other materials involving the bribery of Governor Gibbons copied "over the
years" belonged to him. Montgomery made these representations and others to the Nevada
Federal Court in order to defeat the FBI search and seizure and to defeat the claims of eTreppid.
These representations were all false.
10
36.
These constituted critical representations relied upon by Flynn and other lawyers
11
working for the debtors throughout 2006 until June, 2007, when they withdrew.
12
13
37.
The representations above were placed in sworn declarations executed by
14
Montgomery under the penalties of pe~ury; and many of them were first testified to under oath by
15
Montgomery on or about February 7, 2006 in Reno, Nevada In a preliminary injunction hearing,
16 which was then issued against Montgomery. Montgomery made these misrepresentations under
17
18
oath, and in sworn declarations, and to numerous individuals, including Flynn, for the purpose of
inducing him and lawyers working for him to provide legal services.
19
20
21
38.
In truth, although Montgomery had conveyed whatever technology he did possess
to Opspring and Blixseth, including his copyrights, he never conveyed any "noise filtering" al
22
Qaeda intercepting technology because it doesn't exist. As of October-November, 2005,
23
Sandoval knew from his chief scientist that it didn't exist, but "made a nice story for investors."
24
As of January, 2007, when Ms. Blixseth met with Sandoval's scientist: who told her that the
25
technology didn't exist and was not as represented, and that Montgomery did not appear to have
26
any software development skills, Montgomery and Blixseth continued to deceive Flynn and the
27
28
other lawyers.
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FIRST CLAIM FOR RELIEF
(Objection to Discharge pursuant to 11 U.S.C. 727 (a){2) and (3))
39.
Plaintiff restates all previous allegations contained herein.
40.
The debtors with intent to hinder, delay, conceal and or defraud plaintiff and other
5
6
creditors, have transferred or concealed or have permitted to be transferred or concealed, property

of one or more of the joint debtors within one year before the date of the filing of this petition.
8
9
41.
The debtors have concealed and falsified recorded information regarding the property
from which the debtor's financial condition and business transactions might be ascertained.
10
42.
The discharge of the debtors should be denied pursuant to 11 U.S.C. 727 (a)(2) and
43.
Wherefore, plaintiff demands judgment denying the debtor's discharge and for such
11
(3).
12
13
14
other relief as this Court deems just, including an award of costs and reasonable attorney's fees.
15
SECOND CLAIM FOR RELIEF
16
17
(Objection to Discharge pursuant to 727(a)(3), (4) and (5))
44.
45.
The debtors have knowingly and fraudulently made a false oath in connection with this
18
19
20
case. In particular, the debtors certified under penalty of perjury that the schedules herein were true
21
and correct, when In truth and fact, as the debtors knew, the schedules were false In material
22
matters, including the fact that debtors have pursued a scheme to conceal assets by purchasing
23
bank checks and cashing them in casinos to obtain cash which they have hidden; and a scheme to
24
25
transfer assets without disclosure on their schedules.

46.
The debtors have concealed, destroyed, or failed to keep or preserve recorded
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27
28
information from which the debtors' financial condition or business transactions might be
ascertained.
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The debtors have knowingly and fraudulently failed to explain satisfactorily, before
determination of denial of discharge under 11 U.S.C. 727(a)(5) the loss of millions of dollars in
assets or deficiency in assets to meet the debtors' liabilities while receiving millions of dollars from
4
Edra Blixseth while at the same time procuring second mortgages on their real properties, all
5
evidencing a scheme to conceal assets. Upon information and belief, Montgomery secured the
7 second mortgages after concealing money received from Bllxseth, for the purpose of obtaining
8
9
10
additional cash, concealing it, and defrauding the lenders.
48.
The discharge of the debtors should be denied pursuant to 11 U.S.C. 727(a)(3), (4)
and (5).
11
49.
Wherefore, plaintiff demands judgment denying the debtors' discharge and for such
12
13
further relief as this Court deems just, including an award of reasonable attorney's fees.
THIRD CLAIM FOR RELIEF
14
15
(Objection to Discharge pursuant to 523(a)(2): NonDlschargeable Debt
16
Obtained by False Pretense, A False representation or Actual Fraud)
17
50.
51.
Plaintiff is the holder of a $628,000 judgment, and a $200,000 Sanctions award
18
19
20
entered in the Nevada Federal District Court. The judgment and the Sanctions award are for work
21
and se1Vices performed by plaintiff which were procured by debtors or arising out of the debtors'
22
fraud, misrepresentation and false pretenses. The misrepresentations were continuously made by
23
debtors as part of a scheme to commit actual fraud against plaintiff and others.
24
25
52.
Both debts should be determined to be non-dischargeable pursuant to 11 U.S.C.
523(a)(2)(A).
26
27
28
53.
Wherefore, plaintiff demands jl,Jdgment determining debtor's debts to be non-
dischargeable and for such other relief as this Court deems just, including an award of attorneys
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fees.
FOURTH CLAIM FOR RELIEF
(11 U.S.C. 523 (a)(6) - For Willful and Malicious Injury)
4
5
54.
Plaintiff restates all prior allegations contained herein.
55.
As recited in the Sanctions Order, debtors engaged in a comprehensive scheme and
pattern of outrageous conduct, including perjury, to ucrush Mr. Flynn into submission~ by fabricating
and filing false accusations and claims in venues from Massachusetts to Nevada and to California in
order to defeat the payment of $628,000 in attorneys fees. The various proceedings were entirely
10
fabricated, based on debtor's perjured statements and declaration all designed to willfully and
11
maliciously harass, injure and cause harm to plaintiff.
12
13
14
15
16
17
56.
The judgment and the Sanctions award should be determined to be non-dischargeable
pursuant to 11 U.S.C. 523(a)(6).
57.
Wherefore, plaintiff demands judgment determining debtors' debts for the judgment
and Sanctions award to be non-dischargeable. and for such other relief as this Court deems just,
including attorney's fees.
18
PRAYER FOR RELIEF
19
20
21
22
23
24
25
WHEREFORE, plaintiff on behalf of himself and all creditors, requests that the Bankruptcy
Court enter an Order providing for the following relief:
(i)
Determination that the debts of all creditors are non-dischargeable under 727 of
the Bankruptcy Code; and I or

{ii)
Determination that the debts owed to plaintiff are non-dischargeable under 523 of
the Bankruptcy Code; and for
26
27
{iii)
For all costs incurred herein, including attorneys fees and costs;
28
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For such other and equitable relief as this Court deems just and equitable.
Dated this 28h day of September, 2009
MICHAEL J. FLYNN
/sl?ltkut p. '?~
By: _ _ _ _ _ _ _ _ _ __
Michael J. Flynn, In Pro Per
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ChristotAJher J. Conant[ Cal Bar No. 244597

950 17 Streek Suite 700
Denver, CO 8u202
TeleP.hone: (303) 298-1800
Fax: (30~) 298- f804
Attorney for Plaintiff Michael J. Flynn
5
6
7
8
UNITED STA TES BANKRUPTCY COURT
10
11
12
13
LOS ANGELES DIVISION

CASE NO,: 2:10-bk-18510 bb
In re:
DENNIS LEE MONTGOMERY, and Chapter 7

BRENDA KATHLEEN
Adversary No. 2: 1O-AP-01305 BB
MONTGOMERY
14
AMENDED COMPLAINT TO:
Debtors
15
1. Deny Debtors' Discharge Pursuant

to 11 U.S.C. 727
16
2. Determine Nondischargeability of
Debt Pursuant to 11 U.S.C. 523
17
18
MICHAELJ. FLYNN, an individual,
19
Plaintiff
20
v.
21
DENNIS MONTGOMERY,
BRENDA MONTGOMERY,
22
Defendants.
23
24
25
26
27
28
AMENDED COMPLAJNT
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JURISDICTION AND VENUE

1.
On or about June 26, 2009 (the "Petition Date") the defendants Dennis ,
Montgomery and Brenda Montgomery filed a voluntary petition for relief (the
"Chapter 7 Case'') under Chapter 7, Title 11 of the United States Bankruptcy Code
(the "Bankruptcy Code") in the United States Bankruptcy Court for the Central
District of California, Riverside Branch.

2.
7
8
1334, and 28 U.S.C. l 57(a).
10
3.
This adversary proceeding is a core proceeding under pursuant to 28
U.S.C. l 57{b)(2)(I).
II
12
This Court has jurisdiction over this proceeding pursuant to 28 U.S.C.
4.
Venue of the Chapter 7 Case and of this adversary proceeding is
proper in this district pursuant to 28 U.S.C. 1408 and 1409.
13
5.
This adversary proceeding is commenced pursuant to Fed. R. Bank. P.
I4
700 I (6) to determine the dischargeability of Debtors and of debts owed to Flynn
l5
and other creditors.
16
2.
17
PARTIES
6.
Michael J. Flynn is an individual and judgment creditor of the
18
defendants with a California address of PO Box 690, 6125 El Tordo, Rancho Santa
19
Fe, CA 92067.
20
7.
Defendant Debtors are natural persons residing at 6 Toscana Way,
21
Rancho Mirage, CA 92270.
22
3.
23
24
25
FACTUAL BACKGROUND
8.
Plaintiff Michael J. Flynn is an attorney licensed in Massachusetts and
a judgment creditor of the Defendants.

9.
Plaintiff formerly represented Mr. Montgomery in the Nevada
26
Litigation (defined below) but withdrew as his counsel in June - August, 2007 when
27
he discovered Mr. Montgomery's multiple perjuries and frauds and when Mr.
28
Montgomery ceased paying Mr. Flynn his attorneys' fees.

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Plaintiff is a judgment creditor of the Defendants by virtue of two
separate judgments entered against the Defendants in the U.S. District Court for the
District of Nevada in Case No. 3:06-cv-00056 (the "Nevada Litigation").
I I.
The first judgment was entered against the Defendants on December
16, 2008 in the amount of $628,812.15 (the "600k Judgment") by virtue of the
breach of the Debtors' contractual obligation to pay attorney's fees. See Exhibit l
attached hereto, whfoh is a true and correct copy of the 600k Judgment.
8
9
10
12.
The second judg~ent was entered against Dennis L. Montgomery on
July 8, 20 I 0 in the amount of $204,411.00 (the "200k Judgment") by virtue of an

award of sanctions against Mr. Montgomery and in favor of Mr. Flynn.
13.
11
The U.S. District Court for the.District of Nevada imposed these
12
monetary sanctions against Mr. Montgomery after finding that Mr. Montgomery
13
committed perjury in the Nevada Litigation when he engaged in litigation tactics
14
against Mr. Flynn in "bad faith, vexatiously, wantonly, and for oppressive reasons."
15
See the true and correct copy Magistrate Judge Cooke's HSanctions Order" p.
16
49:11-13, at Docket No. 985 in the Nevada Litigation, attached hereto as Exhibit 2;
17
a true and correct copy of the $204,411.00 judgment is attached hereto as Exhibit
18
3.
I9
l 4.
In the Sanctions Order, the Nevada federal court ordered this award of
20
sanctions against Mr. Montgomery after finding that Mr. Montgomery and his
21
attorneys engaged in a scorched earth litigation strategy to ensure that he would
22
never be paid on the 600k Judgment. Exhibit 2 at p. 45:21-24 ("The court
23
concludes that the animosity Mr. Montgomery and Ms. Blixseth harbored for Mr.
24
Flynn was a catalyst for the litigation strategy to insure - through any means
25
possible - that Mr. Flynn would never be paid and to crush him into submission in
26
the process.").
27
28
I 5.
Further, the Sanctions Order against Mr. Montgomery was the
inevitable result of Mr. Montgomery committing perjury in connection with

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multiple false statements he made under oath in the Nevada Litigation, including
2
but not limited to the matters recited in the Sanctions Order.

16.
The Sanctions Order against Mr. Montgomery has been approved by
District Court Judge Pro and has accordingly been reduced to a judgment. See
Exhibit 4, which is a true and correct copy of the order from District Court Judge
Pro approving Magistrate Judge Cooke's Sanctions Order as against the
Defendants.
8
9
10
17.
Pursuant to said Sanctions Order, Montgomery has been referred to the
U.S. Attorney in Nevada for perjury.

18.
'
The Montgomerys' Chapter 7 Case was filed on June 26, 2009, the day
11
on which Dennis L. Montgomery was ordered to appear before the U.S. District
12
Court for the District of Nevada for his Debtor's Examination in connection with
13
the above stated judgments in the Nevada Litigation.
14
19.
On that date, a motion for contempt and to compel production of
15
previously ordered documents was pending before the Nevada Federal Court (See
16
Docket Nos. 1061, 1075 and 1076 in the Nevada Litigation) as a result of Mr.
17
Montgomery's failure to comply with previous court orders requiring the
18
production of his financial records.
19
20.
Mr. Montgomery had intentionally and willfully concealed his
20
financial records in the Nevada Litigation by, among other things, intentionally
21
deleting specific pages of his bank records containing images of his cancelled
22
checks, which would establish where millions of dollars of money paid to him by
23
Edra D. Blixseth had been hidden.
24
21.
Plaintiff is informed and believes that much of the millions of dollars
25
the Defendants received from Ms. Blixseth have been fraudulently transferred to
26
the Defendants' children and other locations.
27
28
22.
The incomplete records Montgomery did produce in the Nevada
Litigation were contained on an electronic disc consisting of approximately 900

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pages in his possession at that time and at the present time.

2
3
23.
In his 341 Meeting of Creditors in the Chapter 7 Case, Mr.
Montgomery denied possession of these financial records.

24.
The records produced in the Nevada Litigation, coupled with Flynn's
experiences with Montgomery as his former attorney establish an intent to hide or
conceal assets in the Chapter 7Case.
25.
Upon information and belief, based on some of the financial records
that Montgomery produced in the Nevada Litigation, Montgomery purchased
millions of dollars in bank checks from monies paid to him by Edra D. Blixseth, his
10
11
partner in a scheme to defraud the U.S. Government.

26.
Mr. Montgomery and Ms. Blixseth were engaged in a scheme to
12
defraud the U.S. government by peddling to the U.S. Government fraudulent
13
software technology purportedly created by Mr. Montgomery that could allegedly
14
decode secret Al-Qaeda transmissions broadcasted over the Al-Jazeera television
15
network.
16
27.
Mr. Montgomery purchased these millions of dollars in bank checks to
17
conceal his money and assets as he was a subject of a federal criminal investigation
18
and also a defendant in the Nevada Litigation to which he confessed to $26.5
19
million dollars in judgments to third parties.
20
28.
The concealed cancelled checks and other documents which Mr.
21
Montgomery was ordered to produce in the Nevada Litigation would have
22
established where the said millions of dollars have been hidden but Mr.
23
Montgomery initiated the Chapter 7 Case on the same day that he was ordered to
24
produce these documents so that he could continue in his pattern and practice of
25
concealing the whereabouts of his assets.
26
29.
To date, Montgomery has not produced said records. At his 341
27
Meeting of Creditors on September 16, 2009, Montgomery stated that he did not
28
have possession of his records. This is false. The emails sent to Flynn by
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Montgomery's lawyers at the law firm of Los Angeles law firm of Liner,
2
Yankelevitz, Sunshine & Regenstreif in June, 2009 relating to a pending motion for
contempt against Mr. Montgomery plainly reveal that Montgomery was in
possession of his financial records and had prepared the electronic disc that he
produced in the Nevada Litigation.
FIRST CLAIM FOR RELIEF
(Exception to Dischargeability of Debt pursuant to 11 U.S.C. 523(a)(6))
30.
31.
On its face, the Sanctions Order which was reduced to the 200k
10
Judgment establishes conclusively that the $204,411.00 sanctions award against
11
Mr. Montgomery and in favor of Plaintiff was a debt incurred by Mr. Montgomery
12
to Plaintiff as a result of willful and malicious injury perpetrated by Mr.
I3
Montgomery against Plaintiff.
14
32.
As Magistrate Judge Cooke stated and as ratified by District Court
15
Judge Pro, "[t]he court concludes that the animosity Mr. Montgomery and Ms.
16
Blixseth harbored for Mr. Flynn was a catalyst for the litigation strategy to insure-
17
through any means possible - that Mr. Flynn would never be paid and to crush him
18
into submission in the process."
19
33.
As set forth in the Sanctions Order, the litigation strategy against
20
Plaintiff employed by Mr. Montgomery to "crush" Plaintiff into "submission"
21
involved Mr. Montgomery submitting perjured declarations, initiating litigation in
22
California to circumvent adverse rulings in the Nevada Litigation, filing a frivolous
23
complaint against Plaintiff with the State Bar of Massachusetts, and initiating a
24
frivolous fee arbitration dispute with the San Diego County Bar Association, all for
25
the purpose of impugning Plaintiff's professional reputation and collaterally
26
attacking the 600k Judgment.
27
28
34.
As a result of this strategy on the part of Mr. Montgomery to "crush"
Plaintiff into submission, Magistrate Judge Cooke properly found that there was
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"clear and convincing evidence that Mr. Montgomery committed perjury when he
2
signed the September 10, 2007 declaration, and that he signed the declaration in bad
faith, vexatiously, wantonly, and for oppressive reasons. Ms. Klar and Ms. Pham
[Mr. Montgomery's attorneys] filed this perjured declaration in the court and in
California Superior Court. They also used the allegations contained therein in the
San Diego fee arbitration petition and the Massachusetts Bar complaint. This not
only resulted in the delay and disruption of this proceeding; it was motivated by
vindictiveness and bad faith and demonstrates contempt of this court." Exhibit 2 at
49:11M17.
JO
35.
Having found that Mr. Montgomery engaged in this "vindictive",
11
"oppressive'', "vexatious" and malicious conduct, the U.S. District Court for the
12
District of Nevada awarded the 200k Judgment to Plaintiff for the injury he suffered
13
in defending himself against Mr. Montgomery's maliciousness.
14
36.
Wherefore, because the debt owed to Plaintiff by Mr. Montgomery as
15
represented by the 200k Judgment was obtained through willful and malicious
16
conduct by Mr. Montgomery, the debt owed under the 200k Judgment should be
17
excepted from discharge pursuant to 11 U .S.C. 523(a)(6).
18
SECOND CLAIM FOR RELIEF
19
(Exception to Dischargeability of Debt pursuant to 11 U.S.C. 523(a)(2)(A))
20
37.
21
38.
The 600k Judgment against the Defendants was awarded to Plaintiff in
22
the Nevada litigation for unpaid legal fees that Defendants owed to Plaintiff for the
23
legal services he provided to the Defendants in the Nevada Litigation prior to his
24
withdrawal of his representation of them.
25
39.
Defendants retained Plaintiffs legal services in the Nevada Litigation
26
under false pretenses and false representations regarding the validity and ownership
27
of certain software that Mr. Montgomery purportedly developed and owned, and
28
which allegedly could decode secret Al-Qaeda messages embedded in broadcast

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transmissions of the Al-Jazeera network.

2
40.
As of September - December, 2005, Montgomery was a part owner
and employee of eTreppid Technologies in Reno, Nevada; but was then in the
process of being investigated and exposed by eTreppid employees, software
engineers, and the FBI in connection with the creation and peddling of his
fraudulent Al-Qaeda decoding software, and the potential defrauding of the U.S.
Government. These facts are contained in FBI reports prepared in connection with
a search and seizure of Montgomery's house and storage units on file in the Nevada
District Court. See United States District Court for the District of Nevada, search
10
11
and seizure proceedings in the case of In Re Buckthorn, 3:06-cv-263 (PMP, VPC).

41.
Evidence disclosed by the FBI and unsealed on September, 17 2007 in
12
the Nevada Litigation strongly suggests that Mr. Montgomery during his
13
employment at eTreppid represented to the U.S. Government by means of fake
14
testing and validation procedures that his software could in fact decode secret Al-
15
Qaeda transmissions embedded in Al-Jazeera broadcasts.
16
42.
Having purportedly validated this software to the U.S. Government
17
during his employment at eTreppid, Mr. Montgomery and non-party Michael
18
Sandoval then sold the fraudulently represented technology to non-party Edra D.
19
Blixseth who they believed could get lucrative government contracts for the
20
software through her political connections in the Bush Administration.
21
43.
Specifically, between September, 2005 and January 18, 2006, Mr.
22
Montgomery was then planning and actively engaged in taking eTreppid's
23
technology with him to sell it to Michael Sandoval and Edra D. Blixseth.
24
44.
Having been exposed in November, 2005 for fraudulent conduct
25
involving fake testing procedures at eTreppid in a scheme to defraud the U.S.
26
government, on or about January 18, 2006, Montgomery departed eTreppid.
27
28
45.
. Mr. Montgomery and Michael Sandoval convinced Ms. Blixseth that
the Al-Qaeda decoding software which Mr. Montgomery purportedly developed

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and which Mr. Sandoval claimed to have owned 90% of, was legitimate, and that
2
the U.S. government had appropriated $100 million in a "black budget" to buy it.
46.
During the same time frame, Mr. Sandoval's chief scientist had
advised Sandoval that Mr. Montgomery was misrepresenting his technology; and
that it didn't in fact decode Al-Qaeda messages but was a complete sham.
47.
While knowing that Montgomery and Sandoval were scheming to take
whatever technology eTreppid then possessed which would result in the purported
payment of $100 million dollars from the U.S. Government, Ms. Blixseth agreed
with Montgomery and Sandoval to finance new companies to acquire this software;
10
first Azimyth, LLC, and X-Pattems LLC, then Opspring, LLC, and later Blxware
11
LLC.
12
48.
In creating these new entities to obtain ownership of the Al-Qaeda
13
decoding software from Mr. Montgomery and from Mr. Sandoval, Ms. Blixseth
14
agreed to have Opspring LLC pay Montgomery $3.3 Million in "loans" and
15
$100,000 per month in salary.
16
49.
Ms. Blixseth represented to Montgomery, Sandoval and others that if
17
these new companies owned the Al-Qaeda decoding software, that her
18
"connections" to the Bush Administration would guaranty that they received the
19
payment of the $100 million dollars that the U.S. Government had purportedly
20
allocated for that software.
21
50.
Sandoval falsely represented to the government during the FBI search
22
proceedings in Nevada and later to Plaintiff, that he had "90% of the technology"
23
before Montgomery became an employee of Opspring LLC in early April, 2006.
24
Ms. Blixseth confirmed these false facts to the Bush administration.
25
26
27
28
51.
On January 18, 2006, Montgomery departed eTreppid and took the
fraudulent software with him.

52.
On January 18, 2006, eTreppid sued Montgomery in the Reno
Superior Court claiming Montgomery stole the technology, deleted or destroyed it

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off all eTreppid computers, and requested a preliminary injunction to prevent Mr.
2
Montgomery from using, conveying, borrowing against, or even discussing the
technology.
53.
On January 23, 2006, Plaintiff met and spoke with Mr. Montgomery
for the first time. Shortly thereafter, Montgomery retained Plaintiff. For the
ensuing 18 months, Mr. Montgomery spun the same web of lies and fraud to
Plaintiff regarding the ownership and validity of the purported Al-Qaeda decoding
software that he spun to the U.S. government and to the courts.
54.
On February 7, 2006, the Reno Superior Court conducted a 12 hour
IO
evidentiary hearing in which Mr. Montgomery testified under oath that he did not
II
take any technology with him when he left; that the technology self-destructed
12
pursuant to government requested security protocols; that the technology derived
13
from his copyrights which had never been conveyed to eTreppid; and that it was
14
used in "top-secret" government programs.
15
55.
Virtually everything Montgomery said under oath was false.
16
Montgomery made the same false representations to Plaintiff and his other four
17
lawyers during their representation of him. The case was removed to the Nevada
18
Federal Court. The technology now claimed on his bankruptcy Schedules in the
I9
Chapter 7 Case having a value of $10 million dollars, and the purported "source
20
codes" for the technology is the subject of the foregoing false testimony; and was
21
the subject of intensive litigation in the Nevada Litigation.
22
56.
The Nevada Federal Court entered multiple orders against Mr.
23
Montgomery to produce the "source codes" for his purported Al-Qaeda decoding
24
software. He and Ms. Blixseth defied the orders.
25
57.
Montgomery defied the orders because the "source codes" would
26
demonstrate his fraud. After months of evidentiary hearings for contempt, the
27
Nevada District Court imposed sanctions against Montgomery, Blixseth, and
28
Blxware at the rate of $2,500 per day in July, 2008 until Montgomery produced the
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"source codes." He never did.

2
58.
Montgomery and Edra Blixseth then confessed $26.5 million in
judgments to the eTreppid parties in order to circumvent the contempt sanctions
and to conceal the fraud.
59.
Montgomery had in fact taken from eTreppid whatever technology did i

I
exist. In a September 5, 2008 hearing involving Montgomery's false accusations
against the FBI, the Liner finn was compelled to admit that Montgomery made
false statements under oath - they used the term "mistaken." In the subsequent
settlement with eTreppid on or about September 17, 2008, Montgomery admitted to
10
other falsehoods, including his fabrication of emails implicating eTreppid and the
11
Governor of Nevada in a bribery scheme to obtain government contracts.
12
60.
Montgomery made numerous perjured statements in false declarations
13
in order to defeat the search by the FBI and to obstruct discovery in the Nevada
14
Litigation. The FBI involvement arose out of Montgomery's alleged theft of the
15
software from eTreppid.
16
61.
software taken from eTreppid, including the "source codes;" and "classified
18
information" Montgomery took with him when he left eTreppid. They seized his
19
computers and other materials.

62.
On March 1, 2006, the FBI raided Montgomery's home seeking the
17
20
On March 3, 2006, the FBI raided Montgomery's storage facilities
21
seizing extensive electronic media, including hard drives, DVD's and CD's. But
22
the bulk of the technology and other material taken from eTreppid, Montgomery
23
had concealed with a friend of his daughter and future (now present) son-in-law,
24
Istvan Burgyan.
25
63.
Between January, 2006 and April, 2007, when Sandoval, Montgomery
26
and Blixseth attempted to obtain the $100 million "black budget", Flynn was
27
representing Montgomery but did NOT know that the technology was fraudulent,
28
that Montgomery was a pathological liar, that Montgomery had in fact taken
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technology from eTreppid, that both Montgomery and Sandoval had a history of
2
trying to market and sell fraudulent software technology, and that Montgomery was
lying about how much money he had received from Blixseth and what he was doing
with it.
64.
More specifically, between April, 2006 and December, 2006 in
Rancho Mirage, California, in Reno, Nevada, in person, in documents, in
declarations and emails, Montgomery vigorously represented, claimed, and stated
to Plaintiff the following facts: that the "black budget" Al-Qaeda technology was
exclusively created, developed, owned and used solely by him at eTreppid; that the
10
Al-Qaeda intercepts and decoding were vital to national security; that eTreppid
11
never had any ownership or proprietary interest in the source codes for the
12
purported Al-Qaeda software; that he had never taken any of the eTreppid source
13
codes from its premises; and that as a co-owner of eTreppid, his possession of
14
certain hard drives containing emails and other materials involving the bribery of
15
Governor Gibbons copied "over the years" belonged to him. Montgomery made
16
these representations and others to the Nevada Federal Court in order to defeat the
17
FBI search and seizure efforts and to defeat the claims of eTreppid. These
18
representations were an false, but their falsity was not known to Plaintiff during his
19
representation of Defendants.
20
65.
These constituted critical representations relied upon by Plaintiff and
21
other lawyers working for the Defendants throughout 2006 until June, 2007, when
22
they withdrew.
23
66.
The representations above were placed in sworn declarations executed
24
by Montgomery under the penalties of perjury; and many of them were first
25
testified to under oath by Montgomery on or about February 7, 2006 in Reno,
26
Nevada in a preliminary injunction hearing, which was then issued against
27
Montgomery. Correspondingly, Mr. Montgomery made these misrepresentations
28
under oath, and in sworn declarations, and to Plaintiff for the purpose of inducing
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him and lawyers working for him to provide legal services.

2
67.
In truth, although Montgomery had conveyed whatever technology he
did possess to Opspring LLC and Blixseth, including his copyrights, he never
conveyed any Al-Qaeda decocling software because it does not and never existed.
68.
As a result of Mr. Montgomery intentionally making these false
representations to Plaintiff, for the purpose of inducing Plaintiff to perfonn legal
services for him, Plaintiff in fact performed legal services for the Defendants but
has not been paid by Mr. Montgomery for these services, and this outstanding
payment owed to Plaintiff has been reduced to the 600k Judgment.
IO
69.
Wherefore, because the 600k Judgment represents a debt owed to
11
Plaintiff by Defendants which was obtained through intentionally false statements
12
and pretenses upon which Plaintiff reasonably relied, the amounts owed to Plaintiff
13
under the 600k Judgment should be excepted from discharge pursuant to 11 U.S.C.
14
523(a}(2}(A).
15
THIRD CLAIM FOR RELIEF
16
(Objection to Discharge Pursuant to 11 U.S.C. 727(a)(4)(A),(D))
17
70.
I8
71.
The Defendants falsely list on their bankruptcy schedules that the
19
20
fraudulent Al-Qaeda decoding software is worth $10 million.
72.
In fact, the Defendants know that the Al-Qaeda decoding software
21
listed by the Defendants on their bankruptcy schedules as an asset is fraudulent and
22
therefore worth zero.
23
73.
Defendants have therefore made a false oath in connection with the
24
Chapter 7 Case and their discharge should therefore be denied pursuant to 11 U.SC.
25
727(a)(4).
26
74.
The Defendants, representation in their Schedules that they own
27
copyright assets valued at $10 million in their Schedules, is riddled with fraud.
28
Edra D. Blixseth through Opspring LLC_f~rportedly purchased all of

AMENDED COMPLAINT
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Montgomery's software intellectual property in April, 2006, in consideration of the

2
payment to him of $3.3 million and a salary of$100,000 per month. This sale was
later confirmed by the Liner firm again in 2007 when Plaintiff withdrew from
representing Montgomery; and while the Liner firm was representing both
Montgomery and Blixseth.
75.
In addition, and as discussed above, Mr. Montgomery submitted a
false oath in these bankruptcy proceedings during his 341 Meeting of Creditors
when he stated that he did not have possession of his financial records, when in fact
he did have possession of his financial records but refused to acknowledge this
'
JO
11
because of his on-going desire to conceal his assets from his creditors.
76.
Plaintiff is further informed and believes that Defendants have
12
submitted a false oath in the Chapter 7 Case by intentionally failing to disclose the
13
existence and location of certain assets that they have concealed as discussed below :
14
and specifically the monies that Defendants have received from the $3.3 million
15
and $100,000 monthly salary they received from Ms. Blixseth's entities from April
16
of2006 until March of2009.
17
77.
Wherefore, to the extent that the Defendants include the fraudulent Al-
18
Qaeda decoding software in their bankruptcy Schedules as an asset, submitted a
19
false oath by denying possession of his financial records at his 341 Meeting of
20
Creditors, and submitting a false oath by not disclosing the existence and location
21
of concealed assets, Defendants have intentionally submitted false oaths in
22
connection with the Chapter 7 Case, and have withheld financial information from
23
their Chapter 7 Trustee and must therefore have their discharge denied pursuant to
24
727(a)( 4)(A),(D).
25
FOURTH CLAIM FOR RELIEF
26
(Objection to Discharge Pursuant to 11 U.S.C. 727(a){4)(A)(B))
27
78.
28
79.
Plaintiff is informed and believes that the Defendants have presented

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an intentionally false claim in the Chapter 7 Case by listing a legal malpractice

2
claim against the Liner law finn in the amount of $26.5 million.
80.
As discussed above, the Liner law firm represented the Defendants in
the Nevada Litigation and in that Litigation Mr. Montgomery was subjected to a
contempt order in July of 2008 requiring him and Ms. Blixseth to pay $2,500 per
day until he produced the source codes for his fraudulent Al-Qaeda decoding
software.
81.
1o
11
Because Mr. Montgomery knew that the software did not exist, he
could not produce that software and be relieved of the contempt order against him
and Ms. Blixseth.
82.
Thus, to escape the contempt order that they knew they could not
12
comply with, the Defendants and Ms. Blixseth decided shortly thereafter to settle
13
with the Plaintiffs in that case by confessing jointly and severally to $26.5 million
14
in judgments.
15
83.
The Liner law firm represented both the Defendants and Ms. Blixseth
16
in negotiating and executing the settlement that resulted in the $26.5 million in
17
judgments being confessed to.
18
84.
The Defendants confessed to these judgments believing that they
19
would not have to actually satisfy the judgments because they had successfully
20
concealed their assets as described herein and because they believed Ms. Blixseth,
21
who was allegedly worth at least $500 million at the time, would satisfy the
22
judgments with her assets. Thus, the Defendants know that the $26.5 million legal
23
malpractice claim against the Liner law finn as listed in their schedules in the
24
Chapter 7 Case is a false claim because it sterns from the Defendants own
25
intentionally false representations to the Nevada federal court and numerous third
26
parties regarding the existence and validity of the Al-Qaeda decoding software.
27
28
85.
Wherefore, the Defendants' discharge should be denied pursuant to 11
US.C. 727(a)(4)(A), (B) because they have intentionally listed a false claim
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against the Liner law finn in their bankruptcy schedules.

2
FIFfH CLAIM FOR RELIEF
(Objection to Discharge Pursuant to 11 U.S.C. 727(a)(2))
86.
87.
Within one year prior to the Chapter 7 Case, Mr. Montgomery has
intentionally concealed, transferred or caused to be transferred, property of the
estate and therefore his discharge should be denied pursuant to 11 U.S.C.
727(a)(2).
88.
As discussed above, beginning in April of 2006, Mr. Montgomery
lO
received $3.3 million from Opsring LLC and received a$ I 00,000 per month salary
11
from Ms. Blixseth's entities.
12
13
14
89.
Upon infonnation and belief, this salary continued until at least March
of2009.
90.
As Montgomery received his salary, he used those funds to purchase
15
bank checks for the purpose of breaking the chain of bank transfers and traceable
16
checks which would reveal where he ultimately disposed of his cash.
17
18
91.
Montgomery then cashed the bank checks in various casinos and
purchased chips later converted to cash by "street brokers", all as part of his scheme
19
to conceal assets from his creditors and leave no means to trace the flow of his cash.,
With respect to the $3.3 million that Mr. Montgomery received from
21
Opspring LLC, Plaintiff is informed and believes that Mr. Montgomery similarly
22
concealed and transferred these funds through his scheme of purchasing bank
23
checks and cashing them at casinos in Las Vegas for chips and then converting
24
those chips to cash through street brokers.
20
25
92.
93.
Plaintiff is further informed and believes that with the money he
26
received from Ms. Blixseth and her entities, Mr. Montgomery purchased a
27
condominium for his daughter and her spouse, Istvan Burgyan for no consideration
28
to Mr. Montgomery and in doing so, retained a secret ownership interest in the
.] 5-
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condominium for the purpose of hiding such assets from his creditors.
2
94.
Plaintiff is further informed and believes that the Defendants debtors
have used Istvan Burgyan as an accomplice to conceal assets by having him either
open bank accounts with the concealed cash, and/or having him conceal the cash in
hidden locations. Upon information and belief, Istvan Burgyan produced over
$100,000 of this concealed cash to bail Dennis Montgomery out of jail after
Montgomery was arrested on a fugitive warrant for defrauding casinos.
95.
Plaintiff is informed and believes that Mr. Montgomery's intentional
acts to transfer and conceal assets as discussed above were done to hinder and delay
10
Mr. Montgomery's creditors and began in April of2006 and continued until at least
11
March of 2009.
12
96.
Plaintiff is further informed and believes that the Defendants' scheme
13
to hide assets from their creditors also manifested itself through the mechanism of
14
obtaining equity line of credit loans secured by his real estate assets and siphoning
15
the cash advances from those equity line of credit loans into the same bank check
16
scheme described above.
17
97.
Plaintiff is further informed and believes that through the doctrine of
18
continuing concealment, the Defendants have retained an ownership or secret
J9
interest in the assets they have transferred and concealed as described herein since
20
April of 2006 until at least March of 2009.
21
98.
Plaintiff is further informed and believes that from at least April of
22
2006 to at least March of 2009, Defendants engaged in their continuing
23
25
I
Qaeda decoding software Mr. Montgomery was peddling was a complete sham and I
that eventually their fraud would be revealed and would have significant liability to I
26
pay the parties they defrauded along the way.
24
27
28
concealment and transfer of assets because they knew the whole time that the Al-
99.
Their intentional concealment and transfer of assets from at least April
of 2006 until at least March of 2009 was their mechanism for avoiding their
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inevitable liability for their fraud as described herein.

2
Further, and as discussed above, in the Nevada Litigation Magistrate
100.
Judge Cooke specifically found that Mr. Montgomery had intentionally committed
perjury and engaged in vexatious and obstructive behavior for the goal of
preventing Plaintiff from collecting on the money that was due to him from the
Defendants. As a result of this criminal and contemptuous conduct, the Nevada
federal court levied over $200,000 in sanctions against Mr. Montgomery as
represented by the 200k Judgment.
Wherefore, Defendants have intentionally concealed and transferred
I 0 I.
lO
their assets from their creditors within one year prior to the Chapter 7 Case and
11
their discharge should therefore be denied pursuant to 11 U.S.C. 727(a)(2).
12
SIXTH CLAIM FOR RELIEF
13
(Objection to Discharge Pursuant to 11 U.S.C. 727(a)(3))
14
102.
15
I 03.
As discussed above, in the Nevada Litigation Mr. Montgomery was
16
ordered by the U.S. District Court for the District of Nevada to produce his
17
financial records so that Plaintiff could ascertain the location of his assets for the
18
purpose of collecting on the 600k Judgment.
19
104.
Mr. Montgomery failed to comply with this order by omitting from the
20
financial documents that he produced, the specific pages of those financial
21
documents which would reflect his cancelled checks and transfers, which would
22
establish where millions of dollars of money paid to him by Edra D. Blixseth had
23
been hidden.
24
105.
When these omissions were brought to the attention of the Nevada

I
25
federal court, the court ordered Mr. Montgomery to personally appear before it for a
26
judgment debtor's exam but on the day of that exam, the Defendants filed the
27
Chapter 7 Case, thereby perpetuating their continuing concealment of assets and
28
records from their creditors.

-11~~~~~~~~~~~A~M~E~No=E=D~c=oM~P~LA~IN=r=--~~~~~~--~-
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To date and upon information and belief, the Defendants have
intentionally failed to produce and have concealed the financial documents that they
refused to produce in the Nevada Litigation to their Chapter 7 Trustee in the
Chapter 7 Case
107.
Wherefore, Defendants have intentionally concealed their financial
documents and their discharge should therefore be denied pursuant to I l U.S.C.
727(a)(3).
PRAYER FOR RELIEF
WHEREFORE, plaintiff on behalf of himself and all creditors, requests that
10
11
the Bankruptcy Court enter an Order providing for the following relief:
(a)
dischargeable under 727 of the Bankruptcy Code; and I or
12
13
Determination that the debts of all creditors are non-
(b)
Determination that the debts owed to plaintiff are nondischargeable under 523 of the Bankruptcy Code; and /or
14
15
(c)
For all costs incurred herein, including attorneys fees and costs;
16
(d)
For such other and equitable relief as this Court deems just and
17
18
equitable.
Dated this 16th day of July, 2009
19
20
21
CONANT LAW LLC
22
23
24
25
26
27
28
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Jn re: In re:
CHAPTER
DENNIS LEE MONTGOMERY, and BRENDA KATHLEEN MONTGOMERY,
Desc
CASE NUMBER 10-18510; Adv. No. 10-01305
Debtors
MICHAEL J. FlYNN. an lndMdual,

Plaintiff
v.
DENNIS MONTGOMERY,
BRENDA MONTGOMERY,
Defendants.
NOTE: When using this form to Indicate service of a proposed order, DO NOT list any person or entity in Category I.
Proposed orders do not generate an NEF because only orders that have been entered are placed on the CM/ECF docket.
PROOF OF SERVICE OF DOCUMENT

I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is:
A true and correct copy of the foregoing documents described as Amended Complaint with exhibits will be served or was
served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner indicated
below:
I. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING f"NEF"I - Pursuant lo controlling General
Order(s) and Local Bankruptcy Rule(s) ("LBR"), the foregoing document wiU be served by the court via NEF and hyperlink
to the document. On June 15, 2010, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and
determined that the following person(s) are on the Electronic Mail Notice List to receive NEF transmission at the email
address(es) indicated below:
Thomas M Geher lrng@jmbm.com
Jason M Rund trustee@srlawyers.com, jrund@ecf.epiqsystems.com
United States Trustee (LA)
ustpregion16.la.ecf@usdoj.gov
Service information continued on attached page
11. SERVED BY U.S. MAIL OR OVERNIGHT MAIL(indicate method for each pernon or entity served):
On July 7, 2010, I served the following person(s) andtor entlty(les) at the last known address(es) in this bankruptcy case
or adversary proceeding by placing a true and correct copy thereof in a sealed envelope In the United States Mail, first
class, postage prepaid, and/or with an overnight mail service addressed as follows. Listing the judge here constitutes a
declaration that mailing to the judge~ completed no later than 24 hours after the document is filed.
Steven R Skirvin and William E. Crockett
Dion-Kindem & Crockett
21271 Burbank Blvd Ste 100
Woodland Hills, CA 91367
counsel for Defendants
Raphael 0. Gomez
U.S. Department of Justice
20 Massachusetts Av NW!PO Box 883
Washington, DC 20044
Counsel for Interested Party, U.S. Government
This fonn is mandatory. It has been approved for use by the Uniled Sliltw Bankl'\Jptcy Court for the Central Dlslt1ct of California.
Jar1USty 2009
F 9013-3.1
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Case 2:10-ap-01305-BB

Main Document
Page 21 of 21
In re: In re:
CHAPTER
DENNIS LEE MONTGOMERY, and BRENDA KATHLEEN MONTGOMERY,
Desc
CASE NUMBER 10-18510; Adv. No. 1001305
Debtors
MICHAEL J. FLYNN, an individual,

Plaintiff
v.
DENNIS MONTGOMERY,
BRENDA MONTGOMERY,
Defelldsnts.
Ill. SERVED BY PERSONAL DELIVERY. FACSIMILE TRANSMISSION OR EMAIL {indicate method for each person or
I
served
the
following
entity served): Pursuant to F.R.Clv.P. 5 and/or controlling LBR, on
person(s) and/or entity(ies) by personal delivery, or (for those who consented in writing to such service method), by
facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that personal delivery on
the judge will be completed no later than 24 hours after the document is filed.
nalty of perjury under the Jaws of the United States of America that the foregoing is true and correct.
ame
"Vh~,
~ \f. Cro-(1)
~S-~~n~at~u-re~~~~~~~~~~~~
This fonn is mandatory. It has been approved for use by the United Stales Bankruptcy Court for the Central District of Califorrila.
January 2009
F 90133.1
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(185 of 387)
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Entered: 01/14/11 14:22:06 Page 2 of 345
Dennis Lee Montgomery
November 18, 2010
UNITED STATES BANKRUPTCY COURT

In re: Dennis and Kathleen

Montgomery
)
)
Michael J. Flynn,
)
)
Plaintiff,
)
)
vs.
) case No.: 2:10-bk-18510-bb

)
Dennis Lee Montgomery and

Brenda Kathleen Montgomery,
)
)
)
Defendants.
~~~~~~~~~~~~~)
Videotaped Deposition of:

Date:
Reported by:
DENNIS LEE MONTGOMERY

November 18, 2010
Stephanie P. Borthwick
C.S.R. No. 12088
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1
Page. 264 al 2(121 al 564)
November 18, 2010
Deposition of DENNIS LEE MONTGOMERY, taken on
behalf of the Plaintiff, before Stephanie P.
Borthwick, a certified shorthand Reporter,
commencing at the hour of 9:20 a.m., Thursday,
November 18, 2010, at the offices of Yates court
Reporters, 74967 Sheryl Avenue, Palm Desert,
California.
APPEARANCES:
For the Plaintiff:
10
CONANT LAW, LLC
11
Attorneys at Law
12
BY:
13
730 17th street
14
suite 200
15
Denver, Colorado
16
(303) 298-1800
17
For the Defendants:
CHRISTOPHER J. CONANT, ESQ.
80202
18
DION-KINDEM & CROCKETT
19
Attorneys at Law
20
BY:
21
LNR warner center
22
21271 Burbank Boulevard
23
suite 100
24
woodland Hills, California
25
(818) 883-4400
WILLIAM E. CROCKETT, ESQ.
91367-6667
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1
November 18, 2010
For the United States of America:
U.S. DEPARTMENT OF JUSTICE
CIVIL DIVISION
BY:
Federal Programs Branch
20 Massachusetts Avenue,
Room 7150
Washington, DC
(202) 514-4522
10
CARLOTTA P. WELLS, senior counsel
NW
20530
Also Present:
11
Michael J. Flynn, Esq.
12
Sharon Raya, Paralegal to Ms. Wells
13
Tom (last name withheld), u.s. Government
14
Morgan (last name withheld), u.s.
15
Government
16
videographer:
17
Jesse Navarro, orravan Video Litigation
18
services
19
20
21
22
23
24
25
Page 3
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COURT REPORTERS
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Dennis Lee Mon1i~mery
November 18, 2010
08-61570-RBK Doc#: 2115-5 Filed: 01/14/11
09:43:32
09:43:37
THE WITNESS:
I said I don't recall.
BY MR. CONANT:
Q.
It was a yes-or-no question.
A.
Well, if I don't recall I guess the answer
is no, I don't recall.

Q.
8
9
Las Vegas, were you not?

Yes.
11
Q.
What were you doing in Las Vegas yesterday?
12
A.
I'm going to take the -- I'm going invoke
15
16
17
18
my right to the Fifth Amendment.

Q.
Mr. Montgomery, are you aware of any
criminal proceedings against you at this time?

A.
I'm going to invoke my right under the
Fifth Amendment.
Q.
Well, I'm not asking you to tell me
19
anything about what you may have done.
20
you are you aware of any criminal proceedings
21
against you at this time?
22
09:44:30
Mr. Montgomery, yesterday you were in
A.
14
09:44:16
You don't recall.
10
13
09:44:03
I already did.
09:43:51
I just did.
MR. CROCKETf:
I'm asking
counsel, he has advised you
23
and r will advise you that he is taking his Fifth
24
Amendment privilege and he's not going to answer
25
that question.
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Dennis Lee Monli~mery
November 18, 2010
And if you have a difficulty with it, I'm
09:44:30
sure we can take it up with a judge.

MR. CONANT:
09:44:36
he answer it by taking the Fifth Amendment,
Mr. Crockett?
MR. CROCKETT:
09:44:44
MR. CONANT:
MR. CROCKETT:
You heard him do that and
it's on the record, counsel.
11
BY MR. CONANT:
Q.
Mr. Montgomery, so you're taking the Fifth
13
Amendment -- you're pleading the Fifth Amendment in
14
response to my question about whether you're aware
15
of any criminal proceedings against you; is that
16
correct?
A.
I've already answered the question.

MR. CROCKETT:
18
19
Next question.
20
BY MR. CONANT:
21
09:45:14
My last question.
10
17
09:45:00
Did he answer what, the last
question?
12
09:44:53
Did he answer it -- well, did
Q.
Asked and answered, Counsel.
Mr. Montgomery, I understand that you have

cl~rk
22
paid to the
county district attorney in Nevada
23
approximately $450,000; is that correct?
24
A.
I'm taking the Fifth Amendment.
25
Q.
Where did you get the money to pay the

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09:45: 16
clark county D.A. this approximately $450,000?

A.
Amendment.
MR. FLYNN:
Burgyan.
BY MR. CONANT:
8
9
09:45:28
10
Q.
09:45:55
A.
I'm asserting my right under the Fifth
Amendment.
MR. FLYNN:
Burgyan.
13
BY MR. CONANT:
15
Q.
Did you give money to Istvan
Have you ever given money to Istvan
Burgyan?
16
A.
17
Amendment.
18
Q.
okay.
Mr. Montgomery, do you now or have
19
you ever maintained an office in Palm Desert or this
20
general area?
21
A.
22
Amendment.
23
Q.
24
09:46:16
Did you get it from Istvan Burgyan,
12
14
Did you get it from Istvan
Mr. Montgomery?
11
09:45:33
09:45:21
November 18, 2010
25
Mr. Montgomery, you had within this office
a large amount of -- strike that.

You've had in this office computer
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09:46:19
equipment, have you not?

MR. CROCKETT:
Which office are you talking about?
object to the question as vague and ask you to
rephrase it.
MR. FLYNN:
8
9
09:46:30
10
09:46:50
within 300 yards of here.
Within 300 yards of here, Mr. Montgomery,
you've maintained an office, have you not?
12
Amendment.
13
Q.
what happened with the equipment that was
stored in that office?

15
A.
16
Amendment.
17
Q.
That was computer equipment, was it not,
Mr. Montgomery, that you maintained in that office?

19
A.
20
Amendment.
21
Q.
22
09:46:57
Q.
A.
18
I'll
BY MR. CONANT:
11
14
09:46:42
which office are you talking
about?
09:46:25
November 18, 2010
wasn't that computer equipment that you
obtained from Edra Blixseth, Mr. Montgomery?

23
A.
24
Amendment.
25
Q.
wasn't that equipment you obtained from a

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Dennis Lee
09:47:00
A.
Amendment.
MR. CONANT:
Thank you, Mr. Crockett.
appreciate you keeping your comments to yourself.
If you're not going to object or advise your client,
then you can keep your comments to yourself.
10
13
MR. CROCKETT:
object to him continually
asking questions.
MR. CONANT:
He's not asking any questions,
Mr. Crockett.
14
MR. CROCKETT:
15
A little louder, then he won't have to
16
repeat it.
17
BY
18
of course not.
MR. CONANT:
Q.
Mr. Montgomery, the computer equipment that
19
you took out of this office that's 300 yards away
20
from here, that was computer equipment that you
21
listed on your schedule; isn't that correct?
22
23
09:47:52
Why don't you just sit in
his lap.
12
09:47:44
November 18, 2010
11
09:47:21
Mon~t~mery
MR. CROCKETT:
09:47: 13
Entered:01/14/1114:22:06 Page41 of
Page. 210 al 2{!'.33 61 504)
company called Blxware, Mr. Montgomery?
09:47:07
DktEl1uy. 55-2
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MR. CROCKETT:
Object to the question.
Assumes facts not in evidence.
24
Go ahead.
25
THE WITNESS:
I assert my right under the

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345
09:50:01
09:50:12
1
2
A.
Yes.
Q.
okay.
identified down at the bottom right-hand corner as
22-8.
other Intellectual Property.
Mr. Montgomery?
Do you see that,
A.
Yes.
10
Q.
Look over at the right-hand column there,
there purports to be a value of $10 million.

Do you see that?
13
A.
Yes.
14
Q.
Can you explain to me what that $10 million
15
item of intellectual property is, Mr. Montgomery?
16
A.
17
Amendment.
18
Q.
All right.
Flip with me to the following
19
page identified at the bottom right-hand corner as
20
page 22-9.
Mr. Montgomery, are you at that page?
21
22
A.
Yes.
23
Q.
Do you see that bottom paragraph on this
24
09: 51: 12
I'm looking at line 20 or Entry No. 22.

It's identified as Patents, copyright and
12
09: 51:00
Now flip with me to what is
11
09:50:44
November 18, 2010
property, Mr. Montgomery?
09:50:33
25
page that begins with "In addition"?

A.
Yes.
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Dennis Lee
09:52:27
A.
Amendment.
Q.
government concerning your personal property that's
listed on these schedules?

MR. CROCKETT:
I'll object to the question.
It's plainly calling for attorney-client
communication.
10
Instruct him not to answer.
11
MR. FLYNN:
12
i ntel 1 ectual
13
BY MR. CONANT:
Q.
Have him describe the
Mr. Montgomery, can you briefly describe to
15
me the intellectual property that we're discussing
16
here that you just described in your schedules as
17
being subject to the National security Act?
18
19
09:53:18
Has your attorney, to your knowledge, been
in contact with any agency of the united states
14
09:53:10
November 18, 2010
I assert my right under the Fifth
09:52:53
Mon~i~mery
09: 52: 36
09: 52 :47
Entered: 01/14/11 14:22:06 Page 46 of
MR. CROCKETT:
Ms. Wells, do you have any
objection to him answering this question?
20
MS. WELLS:
No.
21
MR. FLYNN:
see, we're on the same side.
22
THE WITNESS:
23
didn't
24
there.
25
speci fi cal 1 y.
I don't believe -- I
don't believe
I could be wrong.
put this segment on
I
I
don't recall that
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09:53:21
1
2
09:53:27
09:53:49
BY
Q.
signed your schedules under penalty of perjury, did
you not?
A.
Yes.
Q.
so is it your testimony, Mr. Montgomery,
that you have no personal property that is subject
to -- I'm sorry, strike that.
Is it your testimony, Mr. Montgomery, that
10
you have no personal property that falls within the
11
description of this paragraph here on page 22-9?

MR. CROCKETT:
13
It's argumentative.
14
evidence.
I'll object to the question.
It assumes facts not in
15
would you like to rephrase it, Counsel?
16
MR. CONANT:
MR. CROCKETT:
19
answer.
20
BY MR. CONANT:
21
22
No.
I want him to answer the
question.
18
09:54:13
Mr. Montgomery, you signed these -- you
17
09:54:05
November 18, 2010
MR. CONANT:
12
09:53:58
PaQe. 213 oi 29\!36 oi 504)
Q.
I'll instruct him not to
Mr. Montgomery, do you have any personal
property that falls within the description
23
MR. FLYNN:
Intellectual.
24
MR. CONANT:
I'm sorry.
25
Thank you,
Mr. Flynn.
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Dennis Lee
09:55:08
MR. CROCKETT:
please, would you, Ms. Reporter.

MR. CONANT:
09:55:16
again.
Q.
Yes.
Q.
Do you see that it says Dennis Montgomery
10
is the holder of certain intellectual property

ri ght:s?
Do you see that, Mr. Montgomery?
12
A.
Yes.
13
Q.
Describe those intellectual property rights
14
to me.
15
A.
16
Amendment.
18
19
20
I assert my right under the Fifth
MR. FLYNN:
I'm glad these gentlemen
stayed.
MR. CROCKETT:
a moment, please.
can we go off the record for
need to talk to my client.
21
MR. CONANT:
22
MR. CROCKETT:
23
THE VIDEOGRAPHER:
24
09:57:36
Mr. Montgomery, do you see this bottom
A.
17
09: 56:04
I'll just ask the question
paragraph on the page identified as 22-9?
11
09:55:38
Read the question back,
09:55:32
Mon~iimery - November 18, 2010
25
You can go off the record.

Thanks.
Going off the record.
The time is 9:56 a.m.

(Recess taken.)
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10:10:26
2006.
BY MR. CONANT:
4
10:10:34
statement on your part?

MR. CROCKETT:
counsel?
BY MR.
Q.
11
MR.
14
15
16
17
19
20
21
22
CONANT:
That also assumes facts not
I'm sorry, let me back up.
When you signed this document, was this a
truthful statement on your part?

A.
I'm going to assert my right under the
Fifth Amendment.
Q.
Mr. Montgomery, describe what this decoding
program is and what you -- sorry.
18
10:11:41
When you wrote it, Mr. Montgomery.
in evidence.
13
10:11:30
CONANT:
MR. CROCKETT:
Q.
At what point in time,
The question is vague and ambiguous.
10
12
10:11:03
Mr. Montgomery, is that a truthful
Q.
10:10:44
November 18, 2010
Describe what you mean on this line 1 by

"decoding programs."
A.
Fifth Amendment.
Q.
Mr. Montgomery, describe what you mean on
23
line 2, starting with the first full sentence on
24
line 2, quote, "My source codes."
25
Please describe to me what "my source

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345
10:14:57
1
2
BY MR. CONANT:
Q.
10:15:23
decoding programs without compensation to our
government in order to stop terrorist attacks and
save American lives.
decoding technology which derives from my 'ODS' are
what Trepp and several government officials were
attempting to steal from me when they raided my
10
MR. FLYNN:
code that was used to stop terrorist attacks?
13
BY MR. CONANT:
15
16
17
Q.
Mr. Montgomery, have you ever created any
source code that was used to stop terrorist attacks?

A.
Fifth Amendment.
18
MR. FLYNN:
19
MR. CONANT:
20
21
22
10:16:16
Did you ever create any source
12
14
10:15:49
My source codes for this
home.
11
10:15:37
And please follow along, Mr. Montgomery.

"I have provided the 'output' from my
10:15:07
November 18, 2010
Q.
All right.
All right.
I'm going to keep going.
Mr. Montgomery, turn with me
back to Plaintiff's Exhibit No. 2.

All right.
we'll go look at Request for
23
Production No. 1 where you are requested to produce
24
the source codes.
25
be marked as Plaintiff's Exhibit No.
I'm going to hand you what will
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10:42:38
2
3
10:42:46
Did you give -- did you give the U.S.
that you're referring to here?
10
A.
Fifth Amendment.
Q.
Isn't it true, Mr. Montgomery, that this,
quote, unquote, "decoding software" that you

reference on line 22 is just a complete fraud?
11
MR. CROCKETT:
12
Go ahead.
13
THE WITNESS:
14
Hold it.
I'm going to assert my right
under the Fifth Amendment.
15
I couldn't hear Mr. Flynn's question.
16
MR. CONANT:
17
THE WITNESS:
18
19
10:43:39
Q.
10:43:22
MR. CONANT:
Government this -- this very specific intelligence
10:43 :14
BY
Did you do that.
10:42:58
MR. FLYNN:
November 18, 2010
That's fine.
I'll repeat it.
okay.
BY MR. CONANT:
Q.
Beginning on line 21, going to line 24 and
20
a half where you reference this very specific
21
intelligence regarding the terrorist plot that you
22
got from your decoding software regarding these
23
arrests in London, isn't that the same information
24
you and Edra Blixseth provided to a person within
25
Dick Cheney's office?

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11:20:49
Q.
Have you ever seen this document before?
A.
I'm not certain.

MR. FLYNN:
3
4
11:20:55
6
7
9
10
11
Q.
A.
MR. FLYNN:
Did you get this document --
BY MR. CONANT:
Q.
Did you provide this document to Timothy
Blixseth, Mr. Montgomery?

MR. CROCKETT:
You're asking my client if a
letter that's addressed to Mr. Blixseth was provided
14
to him by Mr. Montgomery?

Are you asking Mr. Montgomery if he signed
15
the letter?
MR. CONANT:
17
18
I'm asking Mr. Montgomery to
answer my question.
19
MR. CROCKETT:
20
If you can answer it, go ahead.
21
THE WITNESS:
22
23
24
11: 21: 35
I'm not certain.
13
16
11:21:20
Have you ever seen a document like it,
Mr. Montgomery?
12
11:21:14
Document like it.
BY MR. CONANT:
11:21:03
November 18, 2010
25
It's argumentative.
I don't recall specifically.
BY MR. CONANT:
Q.
Isn't it true, Mr. Montgomery, that you
gave a copy of this letter to Mr. Blixseth?

A.

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11:21:39
1
2
11:21:49
Fifth Amendment.
Q.
discussion with Mr. Blixseth regarding any form of
target letter by the grand jury of the
United States?
A.
9
10
11
12
13
14
15
16
17
18
19
11:22: 16
20
21
22
11:22:38
Fifth Amendment.
MR. FLYNN:
11: 22 :06
Mr. Montgomery, have you ever had a
11:21: 55
November 18, 2010
Did he prepare it.
BY MR. CONANT:
Q.
Mr. Montgomery, did you prepare this target
letter that we're looking at?

A.
Fifth Amendment.
Q.
Did you ever give a copy of this target
letter to Edra Blixseth, Mr. Montgomery?

A.
Fifth Amendment.
Q.
can you explain your involvement,
Mr. Montgomery, with this target letter?

A.
Fifth Amendment.
MR. CONANT:
All right.
I'm going to hand
23
to you what's going to be marked as Plaintiff's
24
Exhibit No. 7.
25
(Exhibit 7 was marked for identification.)

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11:22:41
3
4
11:22:51
11:23:10
document.
A.
did.
MR. CONANT:
okay.
For the record,
Plaintiff's Exhibit No. 7 is a purported letter from
the U.S. Department of Justice criminal Division
dated December 12, 2007, addressed to Mr. Timothy
Blixseth, and signed -- purportedly signed by a
10
Mr. Ronald Sharpe.

Mr. Montgomery, do you recognize this
11
Q.
12
document?
13
A.
15
17
18
19
20
21
22
23
24
11:23:33
Mr. Crockett, No. 7.
16
11:23:26
November 18, 2010
Mr. Montgomery, can you please review this
Q.
14
11:23:20
MR. CONANT:
25
Fifth Amendment.
Q.
How do you recognize this document
Mr. Montgomery?
A.
Fifth Amendment.
Q.
Isn't it true, Mr. Montgomery, you provided
a copy of this document to Edra Blixseth?

A.
Fifth Amendment.
Q.
prepared this letter?

A.

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Fifth Amendment.
MR. FLYNN:
3
4
11:23: 40
5
6
11:23:47
10
11
Q.
forged the signature of Ronald Sharpe?

A.
Fifth Amendment.
MR. FLYNN:
Describe all the circumstances
under which you prepared the document.

BY MR. CONANT:
Q.
can you describe all the facts and
13
document, Mr. Montgomery?
15
MR. CROCKETT:
Object to the question.

MR. FLYNN:
Lacks foundation.
-- discussions with Edra
17
regarding the sale of -- and giving it to Edra to
18
kill the sale of the
19
MR. CONANT:
20
21
11:24:24
circumstances concerning your preparation of this
16
11:24:08
Mr. Montgomery, isn't it true that you
12
14
11:23: 51
Forged the signature.
BY MR. CONANT:
8
9
November 18, 2010
Ms. Borthwick, can you repeat
my last question, please.

THE REPORTER:
Question, "can you describe
22
all the facts and circumstances concerning your
23
preparation of this document?"
24
THE WITNESS:
25
I'm going to assert my right

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11:28:45
11:28:49
Q.
can you please answer the question.
A.
His question?
Q.
My --
A.
well,
11:29:06
BY MR. CONANT:
11: 28: 59
another one.
Q.
don't know yours.
He just asked
remember his, not yours.
Mr. Montgomery, please describe to me your
conversations with Ms. Blixseth concerning the
preparation of this document which is marked as
10
Plaintiff's 7.
r invoke my right under the Fifth
11
A.
12
Amendment.
13
Q.
okay.
Please explain to me your
14
conversations with Ms. Blixseth concerning your
15
preparation of Plaintiff's Exhibit No. 6.

A.
17
rs that the letter?

I invoke my right under the Fifth
18
Amendment.
19
Q.
Did you discuss with Ms. Blixseth the
20
preparation of this document in order to assist her
21
in killing the sale of the Yellowstone club to
22
crossHarbor capital Partners?
23
11:29:35
16
11:29:24
November 18, 2010
MR. CROCKETT:
24
argumentative.
25
addition, as
Object to the question as
In
previously stated, any questions

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relating to these documents I'm going to instruct
him not to answer on the grounds of the Fifth
Amendment.
BY MR. CONANT:
11:29:37
11:29:45
Q.
What's your answer, Mr. Montgomery?
A.
He just answered it.
7
8
9
11:30:03
10
Q.
worked with Ms. Blixseth to help her kill the sale

of the Yellowstone club to cross Harbor?
I'll object.
MR. CROCKETT:
12
you're now conducting discovery.

THE WITNESS:
It has --
It's Tim Blixseth.
It's Tim
Blixseth's attorney.
15
MR. CROCKETT:
You're now conducting
16
discovery.
17
which is unrelated to Mr. Montgomery's bankruptcy
18
and is in aid of the discovery your client,
19
Mr. Blixseth, seeks and on those grounds I'll advise
20
and instruct Mr. Montgomery not to answer.
It's obvious you're conducting discovery
In addition to which you continued the line
21
11:30:41
11
14
11: 30: 27
I invoke my right
13
11: 30: 16
November 18, 2010
22
of questions relating to what you purport to be a
23
criminal conspiracy and on those separate grounds I
24
will instruct Mr. Montgomery not to answer the
25
question.
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11:30:41
11:30:55
Q.
What's your answer?
A.
I'm not going to answer the question.
11:31:11
11:31:20
Are you going to invoke the Fifth
Q.
Amendment?
A.
My attorney just answered the question.
Q.
No.
A.
To what?
10
need your answer, Mr. Montgomery.

I
can't even remember now.
what's the question?

Q.
were you involved with Ms. Blixseth to help
12
her kill the sale of the Yellowstone Club to
13
crossHarbor?
I invoke my right under the Fifth
14
A.
15
Amendment.
16
Q.
And for the record, there's nothing
17
established on the record, to be clear, that I
18
represent Tim Blixseth.
19
A.
well, there's
20
Q.
secondly --
21
A.
Yeah, there is.
There's plenty of PACER
22
documents where you're his attorney.
23
capital's attorney, Mr. Flynn --
24
MR. CROCKETf:
25
I'm
doing what my attorney told me to.
11
11:31:04
BY MR. CONANT:
4
11:30:47
November 18, 2010
You're western
It's such a silly statement
it doesn't deserve an answer.

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Dennis Lee Mon~i5amery

11:32:10
THE WITNESS:
Fifth Amendment.
BY MR. CONANT:
Q.
11:32:14
2006?
MR. FLYNN:
THE WITNESS:
10
100,000 a month.
I'm sorry, your question,
Mr. Flynn?
BY MR. CONANT:
There's no question outstanding by
11
Q.
12
Mr. Flynn.
13
A.
well, I'm confused.
You both ask questions
at the same time.

Q.
15
Mr. Montgomery, when did Edra slixseth's
16
entities begin paying you a hundred thousand dollars
17
a month?
MR. CROCKETT:
18
11:32:44
Isn't it true that you started getting paid
by Ms. Blixseth's entities beginning in April of
14
11:32:34
I invoke my right under the
11:32:26
November 18, 2010
Objection.
Lacks
19
foundation.
20
on Mr. Flynn's statement, I will advise
21
Mr. Montgomery to invoke his rights under the Fifth
22
Amendment.
THE WITNESS:
23
24
Fifth Amendment.
25
Ill
Based
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11:32:51
11:33:04
BY MR. CONANT:
Q.
entities -- and when
entities, it's either Blxware, LLC, Opspring, LLC
well, opspring, LLC, or Blxware, LLC.
MR. CROCKETT:
THE WITNESS:
Fifth Amendment.
12
BY MR. CONANT:
same
Q.
Isn't it true that Ms. Blixseth, through
14
her entities, was paying you a hundred thousand
15
dollars a month to facilitate her computer hacking
16
into the emails of Tim Blixseth and Michael Flynn?
17
MR. CROCKETT:
18
THE WITNESS:
24
25
invoke my right under the
These are just sound bites he's making for

his next article.
That's all this is about.
MR. CROCKETT:
22
23
same instruction.
Fifth Amendment.
20
21
11:33:42
same objection.
instruction.
11
19
11:33:36
refer to Ms. Blixseth's
hundred thousand dollars a month in April of 2006?
10
13
Isn't it true they began paying you a
11:33:22
Isn't it true that Ms. Blixseth's
11:33:13
November 18, 2010
know.
BY MR. CONANT:
Q.
What was Ms. Blixseth, through her
entities, paying you a hundred thousand dollars a

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11:33:44
month for?
A.
Amendment.
Q.
sorry.
11
in evidence.
12
and it's compound.
I object.
Lacks foundation.
Assumes facts not

It's argumentative
Based on Mr. Flynn's statement I instruct
14
Mr. Montgomery to invoke his rights under the Fifth
15
Amendment.
THE WITNESS:
17
Fifth Amendment.
18
BY MR. CONANT:
19
Q.
invoke my right under the
Isn't it true that Ms. Blixseth, through
20
her entities, has paid you at least $6 million since
21
April of 2006?
22
23
24
11:34:27
Strike that.
MR. CROCKETT:
10
16
11:34:17
Let me back up.
from Ms. Blixseth through her entities?
13
11: 34: 11
How much in total have you received -- I'm
How much money, total, have you received
11:33:59
How much in total --
BY MR. CONANT:
invoke my right under the Fifth
MR. FLYNN:
11:33:49
November 18, 2010
25
MR. CROCKETT:
same objections.
same
instruction.
THE WITNESS:
I'm invoking my right under
the Fifth Amendment.

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Case. 12-35986
11:34:27
1
2
BY MR. CONANT:
Q.
MR. CROCKETT:
instruction.
THE
Fifth Amendment.
BY MR. CONANT:
10
Q.
Mr. Montgomery, do you know who
Istvan Burgyan is?

Yes, my son-in-law.
12
Q.
Did you know that
deposed Mr. Burgyan in
September of this year?
14
A.
I knew he had a deposition.
15
Q.
Did you talk to Mr. Burgyan about his
deposition?
17
A.
No.
18
Q.
Right.
19
20
21
22
23
24
11:35:37
same
A.
16
11:35:02
okay.
same objections.
11
13
11: 34: 56
WITNESS:
11:34:43
Mr. Montgomery, where did the $6 million
that you received through Edra Blixseth go?
11:34:37
November 18, 2010
25
Mr. Montgomery, are you familiar with a

company called Demaratech, LLC?
A.
Fifth Amendment.
Q.
All right.
Let me go --
MR. FLYNN:
on the record I withdraw all my
objections to the presence of any of the Department

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11:38:14
A.
Yes.
Q.
Did you receive that $12,500 from
3
4
11:38:21
5
6
7
11:38:33
11:38:48
10
Demaratech?
A.
Q.
Mr. Montgomery, can you explain to me what
you did at oemaratech, LLC?

A.
Fifth Amendment.
Q.
When I deposed Mr. Burgyan, I asked him
11
about the source codes -- or intellectual property
12
listed on your bankruptcy schedules and I asked him
13
if Demaratech was using in its business any of that
14
intellectual property that you listed on your
15
bankruptcy schedules.
Now, he said no, but he said something
17
curious.
18
software that oemaratech was using was derived from
19
your intellectual property.
22
23
24
25
He said that the -- it was derived.
The
Does that sound accurate to you,
20
21
11:39:15
Fifth Amendment.
16
11:39:06
November 18, 2010
Mr. Montgomery?
A.
Fifth Amendment.
Q.
In what way is the software that Demaratech
is using different than the intellectual property

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11:39:19
1
2
3
4
11:39:26
A.
Fifth Amendment.
Q.
MR. FLYNN:
Did he get that money for the
BY MR. CONANT:
Q.
Mr. Montgomery, did you receive this
$12,500 for using the -- let me strike that.

Is this $12,500 that you received some form
10
11
of compensation for oemaratech using your
12
intellectual property, Mr. Montgomery?
14
A.
Fifth Amendment.
All right.
15
Q.
16
page 3-29.
MR. FLYNN:
17
18
last check?
I'm going to turn now to
Did you say the date of that
Put the date on the record.
MR. CONANT:
19
All right.
For the record,
20
the date of the last check on page dash 3 -- 3-22
21
check No. 1520 is dated March 3, 2010.
22
11:40:45
okay.
use of -- that's listed in the bankruptcy schedule.
13
11:40:15
11:40:00
you listed on your bankruptcy schedule?
11:39:44
November 18, 2010
Q.
Now if you turn with me, Mr. Montgomery, to
23
page 3-29, if you look on the left-hand column
24
there's a check, check No. 5038.
25
Do you see that, Mr. Montgomery?

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11:40:46
A.
Yes.
Q.
It's made out to Dennis Montgomery.

Is that you, Mr. Montgomery?
11:40:51
A.
I presume so.
Q.
It's made out in the amount of $12,500.

Do you see that?
11:41:00
A.
Yes.
Q.
Did you receive that $12,500?
A.
10
Q.
what did you do with that $12,500?
12
A.
14
Q.
Isn't that $12,500 money you received
compensation for use by Demaratech of the
16
intellectual property you listed on your bankruptcy
17
schedule, Mr. Montgomery?
19
20
A.
Fifth Amendment.
Q.
Mr. Montgomery, are you aware of any
21
efforts by anyone at Demaratech to sell software
22
technology to Israel?
23
24
11:41:38
Fifth Amendment.
15
18
11:41:18
Fifth Amendment.
11
13
11:41:09
November 18, 2010
25
A.
Fifth Amendment.
MR. CONANT:
I'm going to introduce what's

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11:45 :12
We're back on the record.
BY MR. CONANT:
11:45:19
THE VIDEOGRAPHER:
Q.
11:46:00
don't know if
but, if you haven't
A.
You mean 9.
Q.
I'm sorry, is it Plaintiff's Exhibit 9 now?

oo you know who George Birnbaum is?
10
A.
I don't recall the name specifically.
11
Q.
Have you ever contacted -- have you ever
12
been in contact with anyone associated with the
13
government of Israel to sell software?
15
A.
Fifth Amendment.
can you please review Plaintiff's Exhibit
16
Q.
17
No. 9.
18
A.
19
Q.
All right.
did.
Now I'm going to read -- I'm
20
going to represent that this, Plaintiff's Exhibit
21
No. 9, is an email dated June 30, 2010, from an
22
email address from concerned citizen to Michael
23
west, who's an FBI agent.
24
11:46:21
Mr. Montgomery,
you've had a chance to review Plaintiff's Exhibit 8,
14
11:45:48
The time is 11:45 a.m.
11:45:36
All right.
November 18, 2010
25
I'll represent that the concerned citizen

email is from a gentleman by the name of George
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1
11:49:43
MR. CROCKETT:
MR. FLYNN:
BY MR. C-ONANT:
About selling -- have you ever talked to
Q.
anyone at any point in time about selling your
decoding or decrypting software to the Israeli
10
12
government?
A.
Fifth Amendment.
MR. FLYNN:
13
14
15
THE WITNESS:
16
to -- I mean I can't hear him.
18
MR. FLYNN:
possession.
19
20
21
speak up.
Did he have any of this in his
This is a fraud.
THE WITNESS:
BY
MR.
If you're going
"This is a fraud."
CONANT:
Q.
Mr. Montgomery, during the month of May did
22
you have in your possession any form of decoding
23
software?
24
11:50:24
Did he possess during these
dates --
17
11: 50: 17
No, about selling his
decoding/decrypting technology.
11
11:50:08
At any point in time about
11:50:02
2010
anything?
11:49:50
November 18,
with the Israeli government?
2
3
25
MR. CROCKETT:
this year?
You're talking about May of
May of what?
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Blix V YMC App # 87 - 12-35986 - YCLT Reply Re Osc W Exhibits

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Blix V YMC App # 87 - 12-35986 - YCLT Reply Re Osc W Exhibits

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Case: 12-35986, 04/17/2014, ID: 9062168, DktEntry: 87-1, Page 1 of 15

Case No. 12-35986

IN THE UNITED STATES COURT OF APPEALS

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

YCLT'S RESPONSE TO SHOW CAUSE SUBMISSIONS FILED BY

Attorneys for Yellowstone Club Liquidating Trust

Yellowstone Club Liquidating Trust ("YCL T") files this Response to

involved in the Yellowstone Club cases, and political figures and

(Exh. A at pp. 3-9)

Blixseth's grand conspiracy theory even reaches to Washington, D.C.,

(Doc. No. 68-1 at p. 12). Additionally, on

II. SUMMARY OF ARGUMENT

"evidence" that they know to be of highly questionable credibility. This

See Michael J. Flynn Declaration (Doc. No. 78-2) at

Ferrigno and Stillman appeared as counsel for Blixseth and

signed the Emergency Stay Motion. (Doc. No. 52).

Documents allegedly retrieved from his ex-wife's computer

Flynn and Blixseth refer to two documents that were allegedly

(Doc. No. 84 at 4; Doc. No. 78-1 at 4).

In that proceeding, Blixseth brought a Motion for

On January 31, 2013, the Motion for

Blixseth apparently re-filed the motion, but the divorce court

Nevertheless, Flynn and

fact, refer to this "evidence" as "authenticated" (Doc. No. 84 at 4) or

The deposition transcript in this regard

consists mainly of sparring between lawyers as to whether the document can

Making matters even worse, Flynn and Blixseth allegedly received,

As such, the credibility of

Montgomery is critical to the resolution of this matter. However, according

(Exh. J at p. 1). The court further ordered that a copy of its

Flynn continues to assert that Judge Kirscher maintains some type of

serious allegations? The internet -

Flynn maintains that there is "documentary evidence" of Judge Kirscher's

intelius.com the email address of rkirscher@wthlaw.net is currently

rbender@wordenthane.com, not rbender@wthlaw.net. (Exh. L).

responses are particularly astounding because they have been warned on at

(Exh. M). A hearing on this

In other words, when given his

opportunity to place this "evidence" before a court and subject it to rigorous

cross-examination Blixseth raised the proverbial white flag. The bankruptcy

Isl Robert R. Bell

Pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule 32-1, I

Dated: April 17, 2014

Isl Robert R. Bell

Michael John Ferrigno

Michael James Flynn Sr.

Isl Robert R. Bell

Steven L. Hoard (Texas Bar No. 09736600)

Attorneys for Plaintiff

CENTRAL DISTRICT OF CALIFORNIA

MARC S. KIRSCHNER, AS TRUSTEE

Case No. CVl 1-08283 GAF (SPx)

[Request for Judicial Notice filed

MARC S. KIRSCHNER, DOES 1 - 100,

May 21, 2012

ase 2:11-cv-08283-GAF-SP Document 30 Filed 04/11/12 Page 2 of 23 Page ID #:598

1 TO THE PARTIES AND THEIR ATTORNEYS OF RECORD:

Kirschner ("Kirschner"), as court-appointed Trustee (the "Trustee") of the Yellowstone

The Trustee moves for such relief on the following grounds:

Blixseth's Counterclaim should be dismissed, and sanctions should be

Trustee personally in contravention of Fed. R. Civ. P. 13.

Blixseth's Counterclaim intentionally ignores the Barton Doctrine.