Blix v YMC App # 98 | 12-35986 | Flynn Reply Re OSC

8/20/2019 Blix v YMC App # 98 | 12-35986 | Flynn Reply Re OSC

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IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

NO. 12-35986

TIMOTHY L. BLIXSETH

Appellant,

v.

YELLOWSTONE MOUNTAIN CLUB, LLC

YELLOWSTONE DEVEOPMENT, LLCBIG SKY RIDGE, LLC

YELLOWSTONE CLUB CONSTRUCTION CO., LLC

Appellees.

MICHAEL J. FLYNN’S REPLY TO YCLT’S CROSS

HARBOR’S THE YELLOWSTONE MOUNTAIN CLUB’S THE

DEBTORS’ AND SUNRISE RIDGE’S RESPONSE TO THE

ORDER TO SHOW CAUSE

Appeal from the United States District Court for the District ofMontana

Case No. 2:11-73-BU-SEH

Michael J. FlynnOne Center Plaza, Suite 240

Boston, MA [email protected]

Case: 12-35986, 05/01/2014, ID: 9080331, DktEntry: 98-1, Page 1 of 16

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Attorney Michael Flynn herewith replies to the YCLT’s, Cross

Harbor’s, the YMC’s, the debtors, and Sunrise Ridge’s Responses to the

Court’s order to show cause why Appellant and his attorneys should not

be sanctioned for filing the appeal in the disqualification matter. In

their Responses, the appellees have created evidentiary issues as to the

evidence I relied upon as an advocate for Mr. Blixseth in support of our

motion to disqualify Judge Kirscher and then our decision to seek

review in the Ninth Circuit. If these sanctions are upheld under these

circumstances, the Court will effectively chill any litigant’s right to

challenge a judge for bias while sweeping under the rug documents

forensically authenticated in which the central figure in the Montana

bankruptcy cases before Judge Kirscher admitted that the proceedings

were rigged. An abundance of supporting evidence relied upon by Mr.

Blixseth’s attorneys supports the same inescapable conclusion. The

Ninth Circuit can itself authenticate all of this evidence, as did the

Blixseth attorneys. Notably, the Chief Judge never addressed these two

documents in his dismissal of the judicial misconduct complaint.

Sanctions in this matter are themselves indicative of a failure to


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address these admissions, to disclose the emails of Judge Kirscher and

to intimidate Mr. Blixseth and his counsel into submission.

Mr. Flynn herewith adopts the arguments and briefing of his co-

counsel, and incorporates their positions herein as if fully stated. Mr.

Flynn also invokes F.R.A.P. 46(c) and Circuit Rule 46-2(d),(e) and

requests an evidentiary hearing as recited below. The purpose of this

Reply, as was the original Response to the OSC, is to present the facts

and the law as the undersigned analyzed them as an advocate for Mr.

Blixseth as trial counsel in AP 14 having actually observed Judge

Kirscher during the AP 14 trial. The appellees misconstruction of this

primary issue is demonstrated in their gratuitous, irrelevant, ad

hominem attacks on me and co-counsel. This should alert the Court to

their utter failure to address this critical issue in their Responses.

Given the Court’s order on the OSC presumably invoking its

“inherent power,” it is now plain to the undersigned after 44 years of

litigating in the federal court system that it is in a crisis. The law and

the rules are often not followed by a growing number of federal courts,

and, specifically, gross deviations from the rules and fundamental due

process, as occurred here, routinely occur in many bankruptcy courts,


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particularly in large money cases, of which this case is reportedly the

largest bankruptcy in Montana history. See LoPucki: “Courting Failure:

How Competition for Big Cases is Corrupting the Bankruptcy Courts.”

97-122 (2005). It is likely that the Supreme Court in Stern v Marshal

and Executive Benefits (In re Bellingham) is attempting to correct a run

away freight train of judicial corruption.

My 44 years of experience and my conscience tells me that I am

being sanctioned because I am exposing the systemic corruption now

commonly present in the bankruptcy system and rapidly gaining

District and Circuit Court acceptance.

Based on my analysis of the totality of the circumstances and the

documentary evidence, and my observations as trial counsel, it became

obvious in this case that there were such deviations from judicial

propriety as to suggest the corruption of the judicial process by the

assertion of “political pressure” in the Montana Bankruptcy Court –

which is exactly what one email states. (See Exhibit 1 to Flynn Dec.,

Dokt 78-2). Mr. Burkle’s approximately $1.5 million in “donations” and

meetings with the Montana Governor at the same time he and Mr.

Byrne were acquiring the Yellowstone Club (“YC”) and putting it into


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bankruptcy through collusion with Edra Blixseth, the hiring of Mr.

Patten – Judge Kirscher’s “best friend” who repeatedly engaged in what

I considered wholly improper ex parte communications, the remarkable

admissions of Edra Blixseth in two forensically authenticated

documents, the judicially sanctioned criminal conduct of Edra Blixseth,

all suggested gross deviations from the rules governing our system of

justice. It will now require independent jurists to correct this

demonstrable miscarriage of justice.

The rulings, orders and conduct by the Montana bankruptcy judge

and now by the Chief Judge, in my professional analysis, involves the

exercise of raw power in further deviation from the rules of

fundamental fairness; and the “scapegoating” of Mr. Blixseth and his

attorneys for seeking Judge Kirscher’s disqualification; and then

retaliating for seeking remedial assistance from the Judicial

Conference. My January 31, 2014 letter to the Judicial Conference

(Exhibit 7 to my Declaration, Dokt 78-9) recites the basic facts involving

Judge Kosinski’s holding the Judge Kirscher investigation in connection

with our judicial misconduct complaint “in abeyance.” This is directly

analogous to what Judge Kosinski did in connection with Judge Cebul


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and his “mootness” order, where he was subsequently ordered by the

Judicial Conference to make public Judge Cebul’s emails.

Here, the circumstances are far more serious than the Cebul

emails which did not involve a specific case. The Yellowstone Club and

Edra Blixseth bankruptcies involve allegations of judicial misconduct

directly impacting the distribution of a billion dollars in assets, and the

targeting of my client in an ex parte “deal” made at a hotel between

Judge Kirscher and my client’s adversaries. Yet, Judge Kosinski seeks

to sanction Mr. Blixseth and his lawyers for raising these issues, while

issuing an “abeyance” order on the judicial misconduct complaint which

directly concealed Judge Kirscher’s emails. These emails are at the

heart of the disqualification motion, the judicial misconduct complaint,

the reappointment of Judge Kirscher, and finally directly impact Judge

Kosinski’s sanctions order. It is plain from Judge Kosinski’s

involvement in the Judge Cebul case that it became a “political football”

in Montana and in the Circuit Court system. The Judge Kirscher

matters involve the same political forces. But here the issues and the

evidence are far more serious. Judge Kosinski’s attempt to stop the

disclosure of the Judge Cebul emails with “mootness,” subsequently


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rejected by the Judicial Conference, is benign compared to his orders on

these matters which include the suppression of the Kirscher emails in

the face of evidence that Judge Kirscher maintained an email account

with his prior law firm to whom he awarded $22 million with no trial;

and two forensically authenticated documents from Edra Blixseth to her

lawyer that the bankruptcy proceedings were rigged based on the

expenditure of “enormous capital and political favors” by Mr. Byrne,

Burkle and the Montana Governor. These facts mandated investigation

– not an “abeyance” issued by Chief Judge Kosinski.

The conundrum for me is that I have had to appeal these matters

to the very judges, Judge Kirscher and Judge Kosinski, who, pursuant

to my duties of advocacy, are exercising their powers without following

the rules. Thus, I am forced to challenge their judicial authority to

conduct these matters, thereby invoking their ire, anger and retaliation,

and the potential ire of their colleagues, which I believe has resulted in

the sanctions and a gross miscarriage of justice to my client and now to

his attorneys. Throw into this mix, the undisclosed relationships and

potential communications of Judge Kosinski’s wife, a former U.S.

Trustee within the federal bankruptcy system, and Judge Kosinski’s


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“abeyance” of the misconduct investigation, and this Court is confronted

with potential judicial manipulation to protect a colleague, which, under

the law, mandates the purest means of judicial independence and

review by the most untainted members of the Ninth Circuit. If this

Court is to uphold our system of justice, rather than making myself,

and my client and colleagues, sacrificial lambs under a false rubric of

upholding the law in order to conceal demonstrable judicial bias, it

should order the following:

1. Mr. Flynn respectfully requests the disqualification of Chief

Judge Kosinski on the following grounds: (a) his wife is a former U.S.

Trustee, and all communications that his wife has had on this matter

should be disclosed, and her emails produced; (b) in his position as

Chief Judge he was in charge of the Judicial Council misconduct

complaint against Judge Kirscher, and placed those proceedings “in

abeyance,” notwithstanding documented evidence of corruption,

thereby preventing the disclosure of bankruptcy Judge Kirscher’s

emails, as was required by the Judicial Conference regarding Judge

Cebul; (c) in his position as Chief Judge he was in charge of the

reappointment committee involving Judge Kirscher and sanctioned his


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reappointment after the expiration of the time mandated for

reappointment, and after staying the investigation into Judge

Kirscher’s conduct specifically involving the production of his emails,

thereby thwarting review by the Ninth Circuit of Judge Kirscher’s

communications; (d) he exercised the inherent powers of the Ninth

Circuit to sanction myself, Mr. Blixseth’s attorneys, and Mr. Blixseth

for filing the disqualification appeal but continually referencing “no

judicial misconduct,” thereby inserting into that appeal the matters

relating to reappointment and the judicial conduct complaint, and

effectively destroying Mr. Blixseth’s right to counsel and fundamental

right to be heard, all of which improperly influenced the disqualification

appeal; (e) Judge Kosinski displayed a lack of judicial propriety in the

oral argument proceedings on the disqualification appeal repeatedly

asserting to Mr. Flynn that there was “no judicial misconduct,” when

the applicable standard under review at that proceeding was

“appearance of bias,” thereby injecting into the appeal his positions

with the Judicial Council and the Reappointment Committee; (f) his

sanctions order smacks of overt retaliation for Mr. Blixseth and his

attorneys pursuing their lawful remedies with the Judicial Conference


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in connection with my letter dated January 31, 2014 attached as

Exhibit 7 (Dkt 78-9) to my Declaration filed in Response to the OSC; (g)

Judge Kosinski in an unfounded finding ruled that I have “smeared”

Judge Kirscher when all I have done is to expose his conduct within the

rules and filings with the appropriate federal agencies – I am not

responsible for what has appeared in any form of media other than

court and Public Integrity filings; (h) in an improper zeal to reappoint

Judge Kirscher, and absolve him of misconduct, Judge Kosinski ignored

the underlying facts in the disqualification appeal, more specifically

ignoring the remarkable admissions of the central figure, Edra Blixseth,

in these matters; and is now scapegoating Mr. Blixseth’s counsel,

thereby substituting his own bias on whether the facts and evidence

within the scope of our professional judgment acting as advocates for

our client warranted sanctions for our request for judicial review by the

Ninth Circuit of the disqualification matters .

2. With their filings, the appellees have injected scurrilous,

irrelevant, unfounded, blatantly false and/or misleading allegations

relating to me that should compel this Court to either strike their

briefing and exhibits or conduct an evidentiary hearing into the truth or


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falsity of the few relevant issues in their pleadings, including the

credibility of Edra Blixseth.

3. Mr. Flynn requests an evidentiary hearing into the

authenticity of the two documents I relied upon on the Edra Blixseth

computers, one of which she authenticated in a deposition, which

authentication by her I specifically relied upon. Specifically, I relied

upon the forensic examination of Mr. Whiteford who authenticated the

metadata on the documents at issue with the “time clock” on the Edra

Blixseth computer. I request that the Ninth Circuit use its forensic

expert to analyze the metadata; and that Mr. Whiteford be allowed to

testify on these matters; and that Edra Blixseth be compelled to appear.

See Whiteford Declaration attached as Exhibit 2 to Flynn Supp Dec.

The appellees failed to inform the Court that they have never sought

examination of the hard drives to challenge the authenticity of the

documents, nor have they ever responded to the specific facts

authenticating the documents recited in the Reply and the exhibits

attached to The Emergency Motion for a Stay. Instead, they rely upon

Ms. Blixseth’s credibility and attack her former partner – Mr.

Montgomery. Significantly, they have produced a document from Mr.


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Holahan allegedly not including the critical language I cited in my

Response. However, close examination of Mr. Holahan’s document

reveals a gap where the critical language does exist on the original

hardrive. See Flynn Supp Dec at Exhibit 1 attaching the Reply to the

Emergency Motion to Stay which is also at Dkt 56 in this appeal. Their

allegation that I am somehow in collusion with Mr. Montgomery is

absurd. I sought and received sanctions against him and his attorneys

and have hundreds of thousands in judgments against him. See

Montgomery v. Etreppid Techs ., 2009 U.S. Dist. LEXIS 35543

(U.S.D.NV); 2009 WL 910739 (U.S.D.NV).

I have scrutinized Mr. Montgomery’s statements on the two

documents and subjected the documents to forensic examination. I

considered his partnership relationship with Ms. Blixseth, his insider

knowledge, the chain of custody issues, and I relied upon the facts and

circumstances relating to the contents of the two documents, my

knowledge of Edra Blixseth’s collusion with Byrne and Burkle, the

demonstrably improper rulings of Judge Kirscher regarding her, the

intrinsic accuracy of the contents of the documents, and the forensic

examination to conclude that the documents are authentic. The


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appellees fantastical ruminations about what they claim I relied upon

in my professional analysis of the two documents should now be made

subject to an evidentiary hearing. Their reliance on Edra Blixseth’s

credibility is in itself an issue that any independent fact finder would

deem misplaced.

4. Mr. Flynn requests the production of all of Judge Kirschers

emails between November, 2008 and the present to be examined by an

independent referee appointed by the Ninth Circuit.

The appellees are correct that I have no “remorse” about my

appeal of the disqualification issues – but not out of any sense of self-

righteous ego driven compulsion to be “right.” I have been batted

around in enough courtrooms over the past 44 years to have very little

“ego” left on such matters. Rather, I know that my sworn duty is to

advocate for my client; and having been immersed in the facts and law

on these matters for 7 years, my professional judgment is that he is the

victim of injustice at the hands of manipulative greed-mongers with the

complicity of the bankruptcy court. To have remorse in these

circumstances would allow falsehood to triumph over fact, lies to

triumph over truth, and “evil” to triumph over good. I am enough of a


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believer in the morality of the law to still hope that after 44 years “in

the pit” there is such a thing as true justice.

CONCLUSION

Independent jurists on the Ninth Circuit must ask themselves if

ever in their careers have they seen such a collection of evidence

supporting judicial bias, let alone judicial corruption, buttressed by

admissions by the central figure in all of these proceedings, Edra

Blixseth, now reportedly receiving $70,000 PER MONTH from the

Yellowstone Club, stating that the proceedings were rigged, ie, “SB

[Sam Byrne] and BS [Brian Schweitzer] have spent enormous

capital

and political favors to ensure they get the right outcome

from the

Montana bankruptcy judge.”

May 1, 2014

/s/ Michael J. Flynn

Michael J. Flynn

Counsel for Mr. Blixseth


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CERTIFICATE OF COMPLIANCE

Pursuant to this Court’s Order to Show Cause, I certify that thisResponse is proportionally spaced in serif font (Century style), has a

typeface of 14 points, and contains 2,487 words, excluding the parts of

the brief exempted by Fed. R. App. P. 32. By consolidating the Replies

to both the YCLT and the Cross Harbor, Yellowstone Mountain Club,

Debtors, and Sunrise Ridge Responses, in this document, I am under

the word limit for a joint reply. This Brief was prepared using Microsoft

Word and the word court was determined using the Microsoft Word

word count application.

May 1, 2014 /s/ Michael J. Flynn

Michael J. Flynn


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PROOF OF SERVICE

I hereby certify that I electronically filed the foregoing with the Clerk of the Court

for the United States Court of Appeals for the Ninth Circuit by using the appellate

CM/ECF system on May 1, 2014.

Participants in the case who are registered CM/ECF users will be served by the

appellate CM/ECF system.

I further certify that the following individuals are not participants in this appeal but

will receive service of the foregoing as they are interested parties to this appeal. 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 non-CM/ECF participants:

Evan R. Levy

George A. Zimmerman

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

May 1, 2014 /s/ Michael J. Flynn

Michael J. Flynn


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IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

NO. 12-35986

TIMOTHY L. BLIXSETH

Appellant,

v.

YELLOWSTONE MOUNTAIN CLUB, LLC

YELLOWSTONE DEVEOPMENT, LLC

BIG SKY RIDGE, LLC

YELLOWSTONE CLUB CONSTRUCTION CO., LLC

Appellees.

SUPPLEMENTAL REPLY DECLARATION OF MICHAEL J

FLYNN IN SUPPORT OF RESPONSE TO ORDER TO SHOW

CAUSE

Appeal from the United States District Court for the District ofMontana

Case No. 2:11-73-BU-SEH

I, Michael J Flynn declare:

1. I have personal knowledge of the facts stated herein, and if calledas a witness, I could and would testify competently to them.

2. In their overreaching frenzy to attack Mr. Blixseth and myself in

their Responses, (itself indicative of their failure to address the relevant

Michael J. FlynnOne Center Plaza, Suite 240

Boston, MA [email protected]


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facts), the appellees conveniently misstate the essential issue in the

sanctions appeal, i.e. my professional assessment of the evidence and

the law to support the appeal of the denial of the Motion to Disqualify.

The issue is whether my assessment of the law and facts supporting the

“appearance of bias” was objectively reasonable to warrant appeal

thereby negating any lawful possibility of sanctions. The Chief Judge,

himself, in his zeal to protect Judge Kirscher, has misconstrued,

misapplied and convoluted this issue. The Chief Judge’s improper

miscegenation of the evidence and the law (“appearance of bias”) on the

disqualification appeal to impose sanctions based on Judge Kirscher’s

“misconduct,” which involves our requested investigation into Judge

Kirscher’s reappointment and misconduct complaints, which he deems

to be a “smearing” of Judge Kirscher, has exposed and placed at issue

the foundational and forensic evidence which I believed justified all of

our filings - the appeal on disqualification, the objection to

reappointment, and the misconduct complaint. Remarkably, the Chief

Judge failed to address this foundational and forensic evidence. I am

seeking an evidentiary hearing on this forensic evidence; and the

production of Judge Kirscher’s emails, which I requested in my January


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31, 2014 letter to the Judicial Conference. The Judge Kirscher emails

and the two Edra Blixseth documents, one of which she has already

authenticated - notwithstanding the appellees’ pitiable attempt to

disown it – are fundamental to my due process rights to defend against

these unjust sanctions. The appellees have placed these matters, and

the credibility of Edra Blixseth at issue along with the reasonableness

of my reliance on her admissions. Given the stated basis for the OSC, if

the Ninth Circuit deems my reliance reasonable in the totality of the

circumstances, including my reliance on the Edra Blixseth admissions,

it must in good conscience revoke the OSC. The overwhelming weight

of the evidence not only supports the reasonableness of the appeal, it

also supports disqualification itself, along with an investigation into all

matters raised in the judicial misconduct complaint.

3. The appellees resort to broad conclusions about “grand

conspiracies,” “remorse,” “this Court got it wrong,” my failure to include

on a pro hac application a sanction from 33 years ago; and that we

failed to inform this Court that the evidence “from the computer of

Blixseth’s ex-wife” is of “highly questionable credibility.” This latter

charge is itself a false red herring. There is and was no duty to inform


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this Court of the legitimacy of the two documents on Edra Blixseth’s

computers. The forensic evidence and Ms. Blixseth’s authentication

supports our positions in our adversarial system of justice. BUT,

appellees did have a duty to inform the Court that Ms. Blixseth has no

credibility, is a pathological liar, and defrauded banks and lenders of

over $50 million, all ignored by Judge Kirscher. The real credibility at

issue in connection with these sanction matters, is Edra Blixseth’s, Mr.

Byrne’s, Mr. Patten’s and the YCLT’s; and their failure to inform the

Court of the forensically demonstrative evidence establishing the

authenticity of the two documents at issue. The YCLT fails to inform

the Court that it has never had a forensic expert analyze the computers,

as we did; that both documents at issue exist in their forensically

provable form with unaltered metadata; that the chain of custody of the

computers containing these documents is established directly from Edra

Blixseth and her partner, Dennis Montgomery, to the expert, who has

verified the authenticity of the two documents based on forensically

demonstrative metadata. In order to misdirect the Court, the YCLT and

the appellees not only fail to inform the Court of Ms. Blixseth’s criminal

conduct, history of perjury, perjured/dismissed bar complaint against


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me, but also her relationship with her partner, Mr. Montgomery – to

whom she paid over $6 million for work now subject to a criminal

investigation. For a summary of Ms. Blixseth’s perjured and criminal

conduct, all ignored by Judge Kirscher, see Exhibit 1 attached hereto,

which is also Exhibit 1 to our Reply on the Emergency Motion to Stay,

included in this appeal at Dkt entry 56.

4. The documents exist in their unaltered form on Edra Blixseth

computers when Mr. Montgomery was her partner and she was paying

him $100,000 per month, regardless of all the Edra Blixseth / appellee

piteous attempts to now disown them. Her subsequent deposition

authentication confirmed one of the documents. THAT is what I relied

upon. Together with all of the other evidence, they support the

accuracy of her statements that the bankruptcy proceedings were

effectively rigged beyond a reasonable doubt. See my letter requesting a

criminal investigation, dated March 30, 2010, subsequently sent by

Judge Peterson to the U.S. Attorney, attached hereto as Exhibit 3. The

concept that I would rely upon Mr. Montgomery alone as argued by the

appellees, given our history, is absurd. The appellees cavalier disregard

for the forensic evidence, without their own examination, and


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subsequent reliance on the credibility of Edra Blixseth, is shameful;

smears my professional assessment of this evidence; and conceals the

underlying significance and impact of this evidence. Presumably, this

hard forensic evidence will not be ignored by this Court in its pursuit of

sanctions; and will result in the requested evidentiary hearing and the

appearance of Ms. Blixseth for cross examination.

5. The authenticity of the two documents was critical to my

determination that all issues regarding disqualification should be

pursued on appeal outside of Montana. Given Mr. Patten’s involvement

with Edra Blixseth as extensively recited in one of the documents , the

infamous Judge Peterson email to Mr. Patten giving Patten advice to

use against Mr. Blixseth, the emails between Mr. Patten and Judge

Kirscher’s law clerk giving Mr. Patten the ear of the court in this, the

largest bankruptcy in Montana history, the requested investigation into

the Worden Thane secret email account, held “in abeyance” by the Chief

Judge, when he also possessed the two Edra Blixseth admissions, and

the $1.5 million in donations to the Governor by the

Burkle/Byrne/Blixseth cabal; the emails between Mr. Byrne and his

cohorts evidencing admissions that they obtained the YC at a fraction of


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its value through a secret deal with Edra Blixseth made weeks before

she obtained the YC on August 12, 2008, and then 89 days later put it

into bankruptcy in the context of using “political pressure” in the

bankruptcy process, and meetings with the Montana Governor, and

financial data proving that Mr. Burkle – the recipient of the YC in

Judge Kirscher’s approved plan, paid the Governor almost $1.5 million

while the scheme to put the YC into bankruptcy was being

implemented, all of this evidence supports not only the authenticity of

the documents, but also the justification for appeal. I specifically

request the opportunity to present this evidence in an evidentiary

hearing to justify the reasonableness of our decision to appeal the

disqualification denial.

6. The Chief Judge disagrees with my assessment of the evidence

and disagrees with my advocacy and issued the OSC. Obviously, my

right to oppose the OSC supports my disagreement with his evaluation

of how I evaluated the evidence as an advocate for Mr. Blixseth.

However, although the Chief Judge repeatedly and improperly

referenced “judicial misconduct” in connection with the disqualification

appeal, apparently referencing all of the evidence in the reappointment


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and misconduct complaint matters, he did not address that evidence in

connection with imposing sanctions. As stated, our judgment that

appeal was warranted involves all of the evidence we have on Judge

Kirscher, which the Chief Judge miscegenated into the disqualification

appeal as shown by his “judicial misconduct” remarks, but without

addressing it as the basis for our justification to appeal. Plainly, our

request for an investigation into Judge Kirscher’s conduct to the

Judicial Council, given the totality of the evidence, particularly the

Edra Blixseth documents, was justified. In my professional judgment

and experience, the Montana bankruptcy proceedings were the product

of “enormous capital and political favors to insure they get the right

result from the Montana bankruptcy judge,” just as Ms. Blixseth stated

to her lawyer, and which the overwhelming weight of the evidence

supports. However, the Chief Judge thwarted any investigation into

Judge Kirscher and the production of his emails by holding the

investigation “in abeyance.” His sanctions order bespeaks retaliation

and an effort the failure to address the critical underlying evidence

justifying our appeal.


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7. In my professional judgment after 44 years of litigation, the

foundation of our entire adversarial system of justice is based on an

impartial judge with blinders on when it involves ex parte

communications. When evidence exists supporting gross deviations

from that basic principle, particularly when the reputation and

integrity of judges are involved, dutiful advocacy mandates a challenge

to their impartiality. Here, as the evidence evolved, the two Edra

Blixseth documents confirmed everything we already believed was

supported by extrinsic, documented evidence and admissions. The

bankruptcy process had been corrupted against Tim Blixseth in favor of

Edra Blixseth contrary to the law and evidence.

8. The Chief Judge understandably desires to protect the judges he

oversees. My duty is to exhaust all of Mr. Blixseth’s rights and remedies

given the evidence and the magnitude of the issues involved even when

it involves a challenge to perceived judicial bias . Almost a Billion

Dollars of Blixseth marital community assets were distributed by Judge

Kirscher. Even the Supreme Court of Montana has stated that the

Montana judiciary has a history of corruption. I sent the letter to the

judicial conference because our system works that way, because I


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continued to protect Mr. Blixseth’s rights based upon my assessment

that the Court was applying a double standard on my assessment of the

evidence regarding Judge Cebul’s alleged misconduct, the Chief Judge’s

role in that matter, and my assessment of Judge Kirscher’s bias and

alleged misconduct in this specific case involving far more serious

conduct than that of Judge Cebul. I have no remorse about my

assessment of the evidence, no remorse about my advocacy for Mr.

Blixseth, and no remorse about my letter to the judicial conference

challenging the Chief Judge’s role in holding the investigation of Judge

Kirscher “in abeyance.” I have professionally adhered to all of the rules

throughout these proceedings, I observed personally that Judge

Kirscher did not follow the rules in many instances including his court

room exchanges with Mr. Patten, which he endeavored to conceal, in

fact repeatedly deviated from the rules to fulfill a pre-designed result;

and that Edra Blixseth and my opponents in putting the YC into

bankruptcy not only failed to follow the rules, they collectively

concealed over $50 million in Edra Blixseth’s criminal bank fraud in

order to obtain the Yellowstone Club. SER 2740-2787. Yet Judge

Kirscher exonerated her and now the appellees rely upon her


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credibility; and my client is subject to a $40 million judgment involving

a gross deviation from due process and the Federal Rules of Civil

Procedure. The evidence establishes that recipients of Judge Kirscher’s

rulings – Burkle and Byrne - paid off the Montana Governor to the tune

of $1.5 million at the same time that the bankruptcy scheme was being

implemented. The whole matter smells.

9. The appellees cite a vacated 33 year old sanctions order by an

alcoholic judge in Daytona Fl, who I was subsequently informed by an

Assistant Attorney General for the state of Florida was being “removed”

from the bench, and another 30 year old “Scientology war” order. These

irrelevant attacks bespeak their desperation to have the Ninth Circuit

sweep this matter under the rug by vilifying me. I responded to those

attempts before Judge Haddon with the attached declaration. Exhibit 4

attached hereto.

10. As for the continuing investigation into these matters, the roles of

Edra Blixseth, Judge Kirscher, the Worden Thane law firm, and Ms.

Blixseth’s partner, Mr. Montgomery remains at issue. Although I do

not represent Mr. Montgomery, I have been in contact with law

enforcement authorities relating to his involvement with Ms. Blixseth


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and the CIA; and I have reason to believe that Mr. Montgomery is in

the possession of evidence, and is in the process of securing immunity,

and that the authenticity of evidence in his possession will be subject to

scrupulous forensic examination.

11. The Court should know that Edra Blixseth and her attorney also

filed a plainly perjured bar complaint against me which has been

dismissed. Hence, the motives of Ms. Blixseth to aid the appellees in

this matter. See Exhibit 1 attached hereto.

12. The appellees have made credibility an issue, mandating an

evidentiary hearing, particularly in connection with the Edra Blixseth

documents, and my reliance thereon to justify appeal of the

disqualification motion. My assessment of that evidence and the

requested investigation into Judge Kirscher is at issue. My assessment

of Edra Blixseth’s conduct and credibility in this matter was

substantially and gravely impacted by Judge Kirscher’s conduct to

conceal the entirety of the evidence we put before him and the Montana

Bankruptcy Court (see Exhibit 3 hereto) regarding Edra Blixseth. My

44 year study as a litigator before juries specializing in cross

examination about “lying” and perjury by material witnesses was a


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critical component of my assessment of the evidence supporting

disqualification. Judge Kirscher’s continuous, unwarranted, improper,

erroneous suppression of the evidence of Ms. Blixseth’s conduct, and the

admitted destruction of evidence on her computers, which Judge

Kirscher ignored, created a compelling conclusion to me, buttressed by

all of the additional evidence, that “political pressure” had in fact

influenced him. Much has been written in professional journals, books

and legal articles about “lying”, particularly in the context of “human

evil” in connection with “scapegoating”, which has been defined as the

use of lies to cover over misconduct or other lies by those in a position of

power by means of lies to blame or attack their victims or those who

expose them, thereby perpetuating “evil.” See eg , M. Scott Peck.

“People of the Lie.” Simon and Schuster, 1983. The bankruptcy plan

approved by Judge Kirscher itself fits this model with the

“scapegoating” of Mr. Blixseth, and now the targeting of his lawyers.

The proceedings in the Montana Bankruptcy Court in my professional

assessment involve rampant lying and a resultant “evil” plan involving

a gross miscarriage of justice. Remarkably, as cited below, Mr. Byrne

and his cohorts used this precise term of “evil” to describe their conduct


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and Mr. Byrne’s “plan” to obtain a “billion” dollars. Judge Kirscher’s

“findings” regarding Edra Blixseth, a proven pathological liar who

defrauded banks and lenders of over $50 million, who blatantly

destroyed evidence on her computers, who filed a perjured bar

complaint against the undersigned – dismissed, who entered into an

overtly fraudulent “deal” with Mr. Byrne to put the YC into bankruptcy,

and who now denies the authenticity of documents on her computers

which have been forensically authenticated and the hard drives

preserved for further examination, must awaken this Court to justice

gone awry. See Exhibit 1 attached hereto. See complaint and exhibits

filed with the Judicial Council. In my professional judgment, the most

compelling inference for Judge Kirscher’s “findings” protecting Ms.

Blixseth, relates to ex parte communications between Ms. Blixseth’s

lawyer, Mr Patten and the Judge which are evidenced in the

authenticated “Notes on the MSA.” The inference that I draw from the

highly suspect ex parte communications between Mr. Patten and Judge

Kirscher, which are implicitly referenced in the numerous, detailed

references to Mr. Patten in the Notes on the MSA, is that the excessive

judicial protectionism of Ms. Blixseth was done because of Mr. Patten’s


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concern that she would blow open their entire fraud unless she was

protected. Hence, Ms. Blixseth now reportedly receives $70,000 per

month as the “historian” for the YC.

13. The financial motive for the Burkle/Byrne/Blixseth cabal to put

the Yellowstone Club into bankruptcy, have Mr. Burkle

contemporaneously “donate” approximately $1.5 million to the Montana

Governer to use “political pressure” in the bankruptcy proceedings, to

make a contemporaneous secret deal with Edra Blixseth in connection

with the divorce proceedings to obtain the Yellowstone Club, to pursue

a “brilliant but evil” bankruptcy “plan” to make “a billion dollars” and to

now payoff Ms. Blixseth to the tune of a reported $70,000 per month

can be found in numerous documents exemplified by these few: (a) an

October 27, 2008 email between Mr. Byrne and one of his agents, just

12 days before Edra Blixseth filed the bankruptcy petition, in which

Mr, Byrne claims he is writing a bankruptcy “plan” which “could be

brilliant” (Mr. Byrne is not a lawyer but has spent 25 years using the

bankruptcy system to acquire assets), the agent responds it “could be

worth a billion dollars,” “dangerous,” and “possibly evil”, and Mr, Byrne

affirms “it is brilliant;” (b) a March 25, 2008 email to Mr. Blixseth – just


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the day before Mr. Byrne had to close or risk default on Cross Harbor’s

$455 million contract to purchase the Yellowstone Club - to put the

Club into a “pre-packed bankruptcy” to “leverage the B’s” – the minority

shareholders – and to deal with the “nervous” Credit Suisse

bondholders. Mr. Blixseth rejected this judicially manipulated scheme.

Edra Blixseth did not. Exhibit 6 attached hereto. Mr. Byrne the next

day, March 26, 2008, revoked the contract and then within 60 days

began negotiating with Edra Blixseth to have her obtain the Club out of

the divorce proceedings and put it into bankruptcy. An “evil” and illegal

plan to use the Montana bankruptcy court to pull off their “billion”

dollar scheme.

14. The foregoing exhibits, and those cited in my response to the OSC

and numerous additional documents in the appellate record, constitute

just a few documents buttressed by many, many more that I have

examined, justified then and justify now, my belief and professional

judgment that my client has been the victim of the “appearance of

judicial bias.” Judge Kozinski should in good conscience disqualify

himself for all of the reasons cited in my Reply brief.


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Signed under the pains and penalties of perjury this First day of May,

2014 under the laws of the United States.

/s/ Michael J. Flynn

Michael J. Flynn


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"#$%&%' (


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R Y C j j V C DN THE UNITED STATES COURT OF APPEALS ï

s

tos) JF lékEjOR THE NINTH CIRCUIT

AUS 2 1 2213

NO. 12-35986

ju .. . -

nos-zEzun -

ATE

TIMOTHY L. BLIXSETH

Appellant,

YELLOWSTONE MOUNTAIN CLU

J

LLC

YELLOWSTONE DEVEOPMENT

,

LLC

B1G SKY RIDGE, LLC

YELLOWSTONE CLUB CONSTRUCTION CO

.,

LLC

Appellees.

REPLY IN SUPPORT OF EMERGENCY MOTION UNDER CIRCUIT

RULE 27-3 AND 27-13 TO FILE UNDER SEAL AND IN SUPPORT OF

RELATED MOTION TO STAY

Appeal from the United States District Court for the District of Montana

Case No. 2:1 1-73-BU-SEH

Christopher J. Conant

Conant Law LLC

730 17th Street

Suite 200

Denver, CO 80202

Telephone: (303) 298-1800

Cconantxcon(Intxj6Wrs.com

Michael J. Flynn

P.O. Box 690Rancho Santa Fe, CA 92067

Telephone: (858) 775-7624

[email protected]

Phillip H. Stillman

Stillman & Associates

300 South Pointe Drive,

Suite 4206

Miami Beach, FL 33139

Telephone: (888) 235-4279

[email protected]

Michael J. Ferriro

Law Oftice of Michael Ferrigno,

PLLC

1200 N. Main Street, Suite 486

Meridian, ID 83680

Telephone: (208) 319-3561

michaelferrignoWerrigno-law.coln

Attorneys for Appellant Timothy L

.

Blixseth

Case: 12-35986 08/21/2013 ID: 8751547 DktEntry: 56 Page: 1 of 111 Case: 12-35986, 05/01/2014, ID: 9080331, DktEntry: 98-3, Page 2 of 112

(35 of 1


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Appellant, Mr. Blixseth, hereby submits this Reply Brief in Support of his

Emergency Motion to Stay that he conditionally filed under seal

ln light of the time sensitive natureof the Emergency Motion to Stay and

necessarily short reply period, Mr. Blixseth cannot fully respond to the numerous

mischaracterizations, half-trtlths and incomplete recordsset forth in the YCLT'S

Opposition. This is simply not the fol'um in which to spin in a favorable light one

party's version of nearly five years of highly contentious litigation in numerous

fonlms between the same parties

Mr. Blixseth will therefore make three primary and succinct points

.

First and foremost, the YCLT opposes the Emergency Motion to Stay by

attacking the credibility and veracity of the evidence submitted by Mr

Blixseth in

support thereof. As the supporting evidence demonstrates

,

Mr. Blixseth's counsel

undertook sufficient independent efforts to verify as best they could the

authenticity of the evidence of judicial misconduct supporting the Emergency

Motion. Mr. Blixseth's counsel obtained sworn testimony from Edra Blixseth

authenticating certainevidence and also hired independent computer experts in

pursuit of their investigative duties

.

Undoubtedly other parties will and do dispute

the meaning, weight and credibility of this evidence

.

But the point of the

Emergency Motion was not to have this Court weigh evidence

,

assess credibility

1


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and adjudicate the facts within appellate motions practice, although that is

apparently what the YCLT seeks with its Opposition

.

Rather, the point of the Emergency Motion is to demonstrate to this Court

that there is

Kirscher has engaged in judicial misconduct and that due process and the interest

a genuine issue of material fact conceming whether or not Judge

and appearance of justice requires that all of the YCLT'S judgment enforcement

efforts be stayed pending resolution of these genuine issues of material fact by an

independent and objective fact-finder.

investigation and fact-findingis required

,

and that is

Undoubtedly further independent

impetus of the Emergency

Motion.

Moreover, just today did Mr. Blixseth learn that his concerns justifying

emergency relief have come to fruition as unbeknownst to Mr

.

Blixseth, the YCLT

is presently executing on the $40 million judgment granted to it by Judge Kirscher.

See U.S. District Court for the District of Nevada

,

Case No. 2:13-cv-01434.

Second, much of the YCLT'S Opposition is dedicated to making gratuitous

personal attacks against Mr. Blixseth and his counsel

Such personal attacks are

not only unfortunate from a personal perspective

,

but irrelevant to the Emergency

Motion. See e.g., In re Loloee

,

24l B.R. 655,663 n. 9 (9th Cir. B.A.P. 1992)

(EtAbuse the opponent when you have no basis for argument.''CdA.s Cicero said, Gin


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hominem decendum est igitur,quum oratio argumentationem non habet

' PRO

FLACCO j 10''). Again, Mr. Blixseth and his counsel through signiticant

independent investigation and vetting have found suffcientevidence to raise a

genuine issue concerning whether JudgeKirscher and the beneficiaries of the

lt is now for this Court to decide

Mr. Blixseth should be stayed until

YCLT have

simply whether the YCLT'S efforts against

engaged in judicial misconduct.

such time as an independentfact-finder vets the evidence or this appeal and its

1 2elated appeals are processed

.

While it is all too easy for the YCLT to oppose any judicial relief Mr.

Blixseth seeks based on the perceived negative character traits of Mr

.Blixseth and

his counsel (a perception that has been wrongfully perpetuated), the 1aw should be

blind to such methods of advocacy and should defer on factual issues to

independent and objective adjudicators.

Third and finally, the YCLT believes there is some meaning to be gleaned

from the fact that Mr. Blixseth has not yet renewed his contempt motion against

1 The appeal in this case is one of many inten-elated appeals pending before this

Court. see Statement of Related Cases included in Mr. Blixseth's Opening Brief in

this case.

2 B d on a recent order from the Chief Judge

,

he his holding his review of these

Complaint of Judicial Misconduct that Mr. Blixseth in abeyance pending resolution

of the appeals pending before this Court. Thus, Mr. Blixseth requests that all of

the YCLT'S judgment enforcement efforts be stayed, at least until resolution of this

appeal as well as the numerous other related appeals.

3


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Edra Blixseth based on her perjury in the Califomia Superior Court supported, in

part, on the same evidence with which he supported his Emergency Motion

.While

the YCLT'S argument is entirely irrelevant

,

no such meaning should be inferred.

ln fact, one of the reasonsthat Mr. Blixseth has not yet renewed his contempt

gathering additionalevidence of Edra Blixseth'sotion is because he has been

perjury as part of her documented scorched litigation tactics against her adversaries

and their attorneys.See Montgomery v

.Etreppid Technologies, LLC, 2009 WL

910739, 31 (D.Nev. 2009).With that evidence now gathered and having recently

defeated the YCLT'Sand Montana Department of Revenue'sseven-month long

effol't to force Mr. Blixseth

much of Mr. Blixseth's attention (see U.S.

into an involuntary banknlptcy which has diverted

Bankruptcy Court for the District of

Nevada, Case No. 1 1-15010),

3 i t Edra using the same evidence that he used to support hisontempt motion aga ns

Mr.Blixseth is now preparing to re-new his

Emergency Motion. Moreover,as to the YCLT'S reliance on the çtafter the fact''

declarations of Edra Blixseth and her attomey filed in California Superior Court in

which they attempt to retract their prior sworn statements in which they both admit

to creating a document wherein they acknowledgetheir complicity in judicial

misconduct, Mr. Blixseth has already responded to those allegations in pre-hearing

3 The California Superior Court denied his contempt motion in January 2012

)

without prejudice to allow Mr. Blixseth re-file it in appropriate fonu and format.

4


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briefing before the California Superior Courtand has innumerable grounds upon

which to impeach anything Edra Blixseth and her attorney say under oath when the

opportunity finally presents itself

A complete copy of this reply brief with its

supporting declarations filed with the Califomia Superior Court is attached hereto

4 B t that of course is the point of the Emergency Motion

.

Dues Exhibit 1. u

process and the appearance of justice requirethat all the YCLT'S efforts against

Mr. Blixseth be stayed pending resolution by an independent adjudicatorts) of the

genuine issues raised in the Emergency Motion

.

That is all Mr. Blixseth seeks

.

He

does not

Court resolve disputed factual issues

.

seek, as apparently the YCLT does

,

to have the Motions Panel of this

Dated, August 20, 2013:

,.

?

Mi el J. Flynn

Chrl her J. Conant

Attorneys for the Appellant

4 I this reply brief and its supporting declarations

,

Mr. Blixseth and his counsel

explain the efforts they undel-took verify the evidence submitted in support thereof

,

which evidence was also used to support the Emergency Motion

.

5


(40 of 1


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CERTIFICATE OF SERVICE

1 hereby certify that onthe 20th day of August, l mailed the foregoing

document by First Class Mail, postage prepaid to the following:

Robert Bell

Mullin Hoard & Brown, LLP

Amarillo National Plaza Two

Suite 800

500 South Taylor, Lobby Box #213

Amarillo, Texas 79101-2445

Counsel for the YCLT

Charles W. Hingle

Shane P. Coleman

Holland & Ha14 LLP

401 North 31st Street

Suite 1500

Billings, MT 59101-1277

August 20, 2013 - N.

Christopher J. ant, Esq.

1


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.

,

t

.

r

'

-

-

.

t, , j

2)

X'X$

j.,

f. t

1 CHIUSTOPHER J. CONANT

'Cal. B/No. 244597

730 17m Skeet, Suito 200 F j k ; DD

envc, Colorado 80202 SupEjtolvjgguujjjjq..T

elcphone: (303) 298-1800

4 Facsimile: (303) 298-1804 JAN 0 7 2213

Email: [email protected]

5 Attomey for Timothy L

.Blixseth -.-

R Reid - *

7

8 SWERIOR COURT OF CALIFORNIA FORTHE COUNTY OF mc lts

mE

9 In r4 the M

aniage of: Blixsoth Casô No. RmmD91152

1: yeasslgncd to Dcpt. 10 from Dept. F501)

eutioner: Edra Blixseth

11 x RRRPONDENT'S REPLY BRIRF IN

Mu SUPPORT OF MRMORANDUM OF POINTS

12 Axo AUTHORITDS m suppolt'r OF

Respondent: Timoly L. Blixseth RsspoxoExrs MoTloN

FoR3

SANWIONS AND TO SHOW CAUSE

14

15 Judge: Sharon J. Watem

Heming: January 14, 20136

Time: 8:30 mm.

Dept. 107

18

19

20

21

22

24

25

26

27

28

RVPOYX SU LY BRWP


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1 CHRISTOPHER J

,CONANT

'cal. B JNo. 244597

73: 17m street, Suite 2O0

Denver, Colorado 80202

Telephone: (303) 298-1800

4 Facsimile: $03) 298-1804

Email: [email protected]

5 Attorney for Timothy L

,

Blixsel

6

7

8 SUPERIOR couR-r oy CALIFORNIA FORTHB colrx'rv op' RIVERSIDE

9 In re the Marriage of: Bli

xseth Case No. RIDIND9I 152

j () (lteassigned to Dept,10 from Dept. F501)

etitioner: Edra Blixseth

11 RESPONDENT'S REPLY BRIEF IN

and SUPPORT OF MEMORANDUM OF POINTS

12 xxo AUTHORJTIES IN SUPPORT oy

Respondent: Timothy L. Blixsdh psspoxopxTys MoTloN FoR

13 SANCTIONS AND TO SHOW CAUSE

14

15 Judge: Sharon J. Waters

Hearinj: January 14, 2013

16 ume: 8:30 am

.

Dept, 107

18

19

20

21

22

23

24

25

26

27

28

RBSPONDENT'S REPLY BMEF


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1 Respondent Tilnothy L. Blixseth, through his undersigned, hereby submits this Reply

2 brief in support of his Request fbr Order. As an initial matter, Petitioner repeatedly suggests that

Respondcnt's Request for Order was not appropriate because it was allegedly not filed by

4 Respondent's counsel of record. Petitioner is incorrect. The record reflects tlaat on or about July

14, 2O1 1, Mr. Conant, a member of the California Bar, associated in as counsel in this matter

.

6 1

.

PETITIONER HAS BEEN CAUGHT IN HER TANGLED WEB; HER

EXPLANATIONS ARE NOT ONLY UNAVAILING BUT CONTAIN FURTHER

1 ADMISSIONS 'OF HER PERJURY AND FRAUD ON TITIS COURT

g A. Petitioner and Mr. Holahan Admit to their Periurv and Fraud on this Court

It is now undisputed that Petitioner and Mn Holahan not only concealed assets from

Respondent so tllat he could not enforce the MSA obligations that Petitioner owes him

,

but they0

made materially false representations to this Court in furtherance of their concealment

Altlaough 1

Petitioner and Mr. Holahan attempt to provide innocent explanations for theil' now admitted2

gaudulent conduct, their eqplanations embroil them further and are admissions of their fraud on3

this Court when they represented that she had no assets with which to satisfy the obligatious she4

owes to Respondent, Specifically, Petitioner admits that she did not open bank aocounts in her5

own name because she wmzted to conceal her assets from Respondent to whonn she owes $20+6

million in non-dischargeable MSA obligations. Petitioner's Declaration at p. 4:25-5:2. This is by7

definition fraudulent aotivity. Cal, Civ. Code â 3439.04(a)(1). Petitioner even admits that her8

concealment effol'ts in this regard paid offwhen she successfully thwarttd Respondent's attempts9

to enforce the MSA in October of 201 1. fJ. Of com%e, one of the reasons Petitioner was0

successfkl in thwrting Respondent's efforts to collect money legitimately owed to bim was 1

because Petitioner and Mr. Holalaan represented to this Court in July and October of 201 1 that she2

had no assets, Petitioner and Mr. Holahall now admit that she did have money and assets, she just3

did not have it in her own name but was admittedly concealing and latmdering her assets with the4

facilitation of Mr. Holahan and others for the vel'y pupose of defiaudinn Respondent before th

k5

Court in his ability to enforce the MSA obligations Petitioner owes to him. 1d. ln s1Aol4,6

Petitioner admits to successfully defrauding and concealing assets from Respondent by means of7

intontional misrepresentations to this Court. This is a shocking admission and most assuredly8

IGSPONDENT'S REPLY BR1El7


(44 of 1


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1 ts sanctions against her and Mr. Holaham: See also Cal

Rule of Prof. Conduct 5-220) 5-arran

2 2001).

3 Aside from their shocking admissions about intentionally conoealing assets and making

4 knowingly false representations to this Coul-t, other aspects of Petitioner's and Mr, Holahan's

5 declarations reveal significant deception. For example, Petitioner in her deolaration denies that

6 she owned FF&E Liquidators, lnc. Petitioner Declaration ( 6. Yet, Mr. Holahan testiûes that

7 Petitioner directed him to incorporate FF&E Liquidators, Inc,. dtfor he1'.'' Holahan Decl. 6.

*8 While their inability to tdget their story'' straight about FF&E Liquidators, lnc., is indicative of

9 their lack of oandor with this CouTt, that lack of candor morphs into outright deception in lig'ht of

10 Petitioner's other admissions in hcr declaration. Speciscally, in his declaratlon Mr. Montgomery

1 1 explains how many of the payments to him from Petitioners were funneled through FF&E

12 Liquidators, Inc., which is the company Mr. Montgomery testifi es was a company owned and

13 contTolled by Pdtitioner. Montg. Decl. j 6. The bank statements sublnitted by Mr. Montgomery

14 oorroborate this. Mont. Decl. 12, Ex, 2. And Petitioner does not deny that she paid Mr.

15 Montgomm'y through FF&E Liquidators, Inc. Jndeed, Petitioner admits that she paid Mr.

16 Montgomery over the last yeal' to develop software (Petitioner Declaration 6) but is noticeably

17 evasive about how she paid him particularly in light of the faot that she admits that she did not

18 have any bank aocounts in her own name. What is revealed by Petitioner acknowledging th't she

19 -. -

1 In her declaration

,

Potitioner exouses the fact that she did not open bank accounts in her own

20 name by shifting the blame to Respondent an

d his desire to colleot on money legitimately owed to

him: in other words, she cries: d'Tim made me do itl'' Petitioner's Deolaration at p. 4:25-5:2.

21 Even assuming that Respondent is the only reason Petitioner engaged in a money laundering

scheme to hide her assets, this does not excuse her fzaudulent transfer activity. Petitioner

22 legitimately owes Respondeht over $20 million in outmacding MSA obligatiohs. Petitioner may

not like the fact that she owes this money to Respondent, but she does and she owes it to him after

23 bargaining at arms-length while they were b0th represented by competent counsel. Petitionor,

unfortunately, ended up in banltruptcy slzortly aher the MSA was consmmmated beoause, coupled24 with inancial and c'redit crisis that hit the world economies in the fall of 2008, she made a

number of risky business decisions and assumptions in entering into the MSA, al1 of whioh her

25 attorneys cautioned her about (see Exhibit 2 to Conant Dec1.) before entering into the MSA,

Seelting to avoid the oonsequences of her own pool' decisions, she has decided to blame

26 Respondent for a1l of her post-MsA woes, While this has been Petitloner's theme for the last

several years, Petitioner's latest declaration is remarkable in that it appears to be the srst time that

27 Petitioner has openly admitted to engaging in f'raudulent activity, yet she is tmashamed of doing

so because she apparently believes that blaming Respondent for her own conduct is a suffcient

28 excuse to exoulpate her from wrong doing'

lulsl'oxoENT's RSPLY BluISF


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1 paid M.1*. Montgolnery tlarough FF&E Liquidators, Inc. while at the same time denying that she

2 owned FF&E Liquidators, Inc. even though Mr. Holahan admits that he incorporated Stfo1' her'' is

3 a significant and unmitigated level of deception on this Court.z

4 B. Petitioner's Explanation of Her Pen-ured Statements Concernhzz Mr

.

Flvnn

Are Unavallinc

5 P

etitioner admits to the authenticity of the emails provided by M1'. Blixseth in his Request

6 f

or orderwherein she admîts to her attornôys and others that Mr. Flynn was never her lawyer

,

1

-

ftlrther admits that during the relevant time period in which she made these numerousetitionel

8

representations to her attornoys uaat those emails acourately reneoted lwr belief that Mr

.

Flynn

9

.

her attorney. Petitioner's Deolaration lf s (çqt is true that I later stated that Mike Flynnas nevm

10

was never my lawyer. That was my understanding then . . . .''). However, in atl attempt to explain

1 1

away her demonstrable perjm'y before this Court in which she testiles under oath that Mr, Flynn

12

was her attorney, Petitioner hides behind the expedient excuse that with hindsight she now

13

understands and believes that under California 1aw Mr. Flynn was her attorney because she paid

14

.

Dennis Montgolnery and he allegedly provided her some casual insightis fees to replesent

15 ,

oonceming ller divorce because it impactt &is thon o lent M'r. Montgomery, ''-lrl.lll'tlonex s posb

16 h

oc excuse simply higllliglïts that siïe knows s:e has beon oaught peTjudng hevself.

17 , t

wlsted peljuries are specmcally encapsulated in her present sworn use ofs. Blixseth s

18

.

d çqater'' in the aforesaid quote. When she now states under oath tllat ït 4çis true that 1 laterhe wo1

19

20 2 Jn support of her defonse that she and Mr

.

Holahan did not mislead t'hts Court when they

represented that she 'had no assets, Petitioner believes s.t is skgnifloant that the pictmes skowing

21 hel. lavish fulmishings and art in her luxury Bevel'ly Hills apartment (an apal-tment costing

$7,500/month in rent, Exhibit 1 to Conant Decl., pp. 8:5-8, 22-24) were taken four months aftel'

22 she made these representations. This is siinply incredible. Do Petitionm' and her attorney rcally

oxpect this Cotu't to believe that she was destitute in July and October of 2011 but then only two

23 months later 'thit it big'' allowing her to live in a luxury Beverly Hills apartlnent decorated with

the a'rt and furnittve from Porouphle Creek whioh she owned before the divorce? This is non-

24 ense

.

11 , belief that California 1aw dictates that Mr

Flynn was her lawyer because she paidetitioner s

25 Mr

F. lynn's legal fees to represent Mr. Montgomery is unsupported by law. First, whetlaer

california 1aw applies is highly questionable because Mr. Flynn represented Mr. Montgomery in

26 connection with litigation in Nevada federal comt Regardless, both California and Novada l'ules

of professional conduct s'peciâcally contemplate and allow someone other than the client to pay

27 the client's attorneys' fees without the payor also becomhlg a client of the attorney by vil-tue of

aying tho client's fees. California Rule of* Professional Conduct 3-31O(F); Nevada Rule of

28 professional Conduct 1.8(9.

RESPONDENT'S REPLY BRIEF


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1 stated that Mike Flynn was never my lawyer,'' she is again lying to the Court. She did not çllater''

2 state that Mr. Flynn was her lawyer, she repeatedly made that assertion contemporaneously with

3 when the issue was pending. She previously in July, 2007, when the res gestae of this issue was

4 then being litigated in the Nevada Federal Coult made those denials, not d


48/178

1 irrelevant.'' 1d. The Petitioner's contemporaneous emails to her then attorneys and others

2 repeatedly disolaiming in no uncertain terms that Mr. FlymA was C'never her attorney''

3 uneqtlivocally demonstrate that she did not believc that Mp Flynn was her attorney. Thus,

4 because Petitioner never believed that Mr. Flynn was her attorney, and details in emails her

5 conduct consistent with that contemporaneous belief (i.e., that she had her own attorneys and

6 always corrected Mr. Flynn if he suggested that he was her attorney), as a matter of law, Mr.

7 Flynn was never her attorney. The Petitioner's now Sfhindsight'' belief to the contrary after being

8 coached by Mr. Holahan and taken for no other purpose than to gain a strategic litigation

9 advantage over Mr. Blixseth merely higblights her atld Mr. Holahan's unmitigated willingness to

10 commit peljury when it suits their ends.

1 j c. Petitioners' Claims that Exhibits 9. 10. 11 and 12 Are Alte

red and Fabricated

Rinu Hollow

12

.

d lwr attorney have no other choice but to claim that the documents attachedetitionel an

13

.

d because f r them to admit to their authenticitys Bxhibits 9, 10, 1 1 or 12 are fabrioated or altele

14

. tlw criminal implications of theirs for theln to admit serious crimes. Moreover, to deflect flom

15

oNvn documents, Petitioner and her attorney pisdirect this Court by going on the offense against

16 R

espondent, his attorneys and M1-. Montgomery. Their efrorts ring honow.

17 . ' petiti

oner cannot deny the authenticity of the tsNotes on the MSA'' dooument11st,

1 8 ' ,

attached as Bxhibit 11 to Montgomm'y s Dcclaration because on December 14, 2012, she

19

.

document under oath during her deposition. lndeed, not only diduthenticated this vely

.

20

.

tlwnticate this document at her own deposition, but the transcript reflects that Mr.etitionet au

21 i

also authenticating it as a document he worked on with Petitioner.olahan spont signiscant t me

22 lixseth's Decembel' 14

,

2012 deposition transcript, pp. 268-276 and deposition exhibitee Edra B

23 laration as Exhibit 1 lled concurrently herewith

.113 their Respons:1, attached to conant Dec

24 h this court

,

Petitioner and Mr. Holahan fail to acknowledge that they authenticated thisiled wit

25 ks ago

.

Instead, Petiuonel. and her attorney submit self-serving emailsery documentjust wee

26 ç$ d aste'' of some form of the SçNotes on the MSA'' document thathat allegedly contain a copy an p

27 . d in septembm' of 2009 (Holahan Ex

A-1) and tlaey also submit the alleged realetitioner pepare

28

RESPONDENT'S REPLY BRIEF


(48 of 1


49/178

tlNotes on the MSA'' document (Holahan Ex. A-3). Neither of these documents helps their cause,

2 Ctlriotlsly, on the last page of what Petitioner claims to be the real tiNotes on the MSA'' document

3 (Holahan Ex. A-1 and A-3), there is an unusually large gap or lnultiple ç'hard return'' spacing

4 where Petitioner's most illicit statements were located in the ''Notes on the MSA'' document

5 attached to Montgomery's declaration. Clearly Petitioner and her attorney deleted hor illicit

6 statements from the doculnents they filed with this Court but failed to properly edit those

7 doctmzents following their o'wn alteration thereof to Rcover their tracks'' by removing the gap

8 created by their deletion.

9 More importmttly, however, independent evidence supports the authenticity of the

10 doculnents submitted by Mr. Montgomery tlaat cannot be disputed by Petitioner's and MI..

Holahr's self-serving declaration. Submitted concm-rently herewith is the declaration of Robel't

12 Whiteford who is an indopendent computer expert that Mr. Blixseyh and Mr. Flynn retained

13 months ago for the ptlrpose of investigating the ''mdadata'' contained on electronic fles and

14 computers that Mr. Montgomery produced to Mr. Blixseth's counsel. See also Conant Decl. 7.

15 Among the many things investigated by Mr. Whiteford were the dates that Exhibits 9, 10 and i 1

16 were created and last modified on Vs, Blixseth's eleotronically stored media. 1d. As Mr.

17 Whiteford testiûes in his declaration, the Gtblotes on the MSA'' document was created on

18 September 20, 2009 and last modified on October 23, 2009. Whiteford Declaration 7. The fact

19 that the Notes on the MSA document as submitted by Mr. Montgomery in his declaration was last

20 modified on Octobor 23, 2009 renders meaningless the supposed September 29, 2009 earlier

21 version orthe document that Mr. Holahan attaches to his declaration. Indeed, notably absent

22 from Petitioner's and Mr. Holahan's declaration is any representation that Exhibits A-l and A-3

23 to Mr. Holahan's declaration are the latest versions of that document in their possession.

'eover, the last modiication on October 23, 2009 occurred at a time when Petitioner had4 Mo1

ion and control of the computer on which this document was modified. ln qddition,5 possess

itioner suggests that Mr. Montgomery would have had a motivation to alter the document6 Pet

f only since June of 2012 when she parted ways with him, yet the last modiication to this7 hi

msel

d ears before then at a time when Ms. Blixsoth had possession of the fles and8 d

ocument oocurre y

.

6

RIISPONDENT'S REPLY BRIEF


(49 of 1


50/178

1 well befol'e any alleged motivation by Mr. Montgomery to tamper with the doouments would

2 have arisen.

3 Second, to deflect from the criminal implications of their own documents, Petitioner and

4 Mr. Holahan go on the offense against Respondent and his counsel, claiming that Respondent and

5 Mr. Conant submitted knowingly fabricated documents in Mr. Montgomery's declaration.

6 Nothing could be further from t'he truth. ln fm-therance of their investigative duties to this Court,

7 prior to filing Mr. Montgomery's declaration and its accompanying exhibits, Respondent and his

8 counsel l'etained Mr. Whiteford to independently vmify the authenticity of the electronic

9 documents on Petitioner's electronic storage devices, and particularly Exhibits 9-1 1 to Mr.

10 Montgomery's declaration. Conant Declaration 79 Flynn Decl. 13, As discussed above,

1 1 Respondent and his counsel taslced Mr. Whiteford with determining the date created and last date

12 modified of Exhibits 9-1 1 to detennine if these documents were last modi'fied at a time when

13 Petitioner was in possession of the files or if they were recently modifed, thereby suggesting that

14 Mr. Montgomery had altered the contznts of tize files. 1d. Mn Whiteford reported to Respondent

15 atzd his counsel that the original electronic files represented by Exhibits 9-1 1 were last modified

16 on October 25, 2009 , July 17, 2011 (notably this is the date before Petitioner filed her opposition

17 wit, this Cotu't to Respondent's pro lzac vice application for Mr. Flynn), and October 23, 2009,

18 respectively, Whiteford Deol, 7-10. These dates are a11 dates that Petitioner had control of the

19 electronic files (aocording to Mr. Montgomery's declaration which Petitioner did not refute) and

20 therefore Respondent atld his counsel were and are satisfied as to the authenticity of the

21 documents in a mannm. that is independent of any reliance on Mr. Montgomery, Mereover, given

h hi hl ersonal and detailed content of the documents, Respondent and his cotmsel wel'e2 t e g y p

23 suflkiently satisfied that the documents could only have been drafted by Petitioner.

24 Third, the irony of Petitioner attacking the credibility of Mr. Montgomery and referring to

25 him as a dscon-man'' only now should not be lost on the Court and cannot bc believed. Petitioner

26 acknowledges tbat Mr. Montgomery has been her business partner for the last six years.

27 Petitioner so twsted Mr. Montgomery that she paid him $ 100,000 a month between April of'2006

28 and May of 2009 to develop software for her. See 2009 deposition of Petitioner attached to

7

RESPONDENT' S IIEPLY 1)RIEIZ


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1 ConmAt Decl. as Ex. 3. Indeed, in an email dated November 5. 2008 (after the MSA was

2 consummated) Ms. Blixseth told Mr. Montgolnery that being successful with their teohnology

3 company was a11 she cared about, notwithstanding the hundreds of millions of other assds she

4 obtained out of the MSA. See Ex. 1 to Petitioner's deposition transcript attached to Conant Decl.

5 as Exhibit 1. Moreover, her own attorneys were smwtioned by a federal court in furtherance and

6 in defense of her padnership relationship with Mr. Montgomery, See Montgomery v. Etreppid

7 Technologies, LLC, 2009 WL 910739, 31 (D.Nev. 2009). Pditioner is also cmrently in contempt

8 of @ Colorado federal court and there is currently a warrant out for her arrest as a result. Conatlt

9 Decl. J 4. Additionally, in her deolaration Petitioner admits to lalmdering mone/ and cash over

10 the last year to pay Mr. Montgomery to develop teclmology for her.

11 The point being, Petitioner has long placed her trust atld confdence in Mr. Montgomery,

5 d has engaged in highly questionable conduct on2 paying h1m $ 100

,

000 a month for three years, an

13 his behalf; therefore her cuzrent attempts to attack his credibility is p'edictable, but not well-

14 taken. Indeed, beoause of the long-standing partnership relationship between Petitioner and Mr,

15 Montgomery, he knows precisely Gçwhere the bodies are buried'' and is therefore best suited to

.

1 66 reveal a11 the frauds that Petitioner has been engaging in over the last sevela years

.

17 z

.

PETITIONER'S SUGGESTION T

-

HAT MR. FLYNN HAS G

IVEN MR.

MONTGOMERY A aGIFT'' IS NOT SUPPORTED BY THE RECORD

18

Petitioner, based purely on conjecture, claims that Mr. Montgomery's declaration is the

roduct of Respondent's attorney, Mike Flynn, purchasing Mr. Montgomery's fonner home in the

20

town of Yal-row Point, State of Washington (hereinaf-ter uYarrow Point Propertyh') out of Mr.

4 Altlzough she claims that she is not laundering money, she admits to not opening bank accounts

22 in her name and using others to funnel money to Mr, Montgolnery a11 under the guise of

. assets from Respondent because she owes him over f20 million in olkigatiooncealing he1

23 undor the MSA. This is the definition of money laundering and is by deinition fraudulent

onduct. See cal. civ. Code j 3439.04.

l ims in her deolaration that she ngvel' shared an office with Mr. Montgomery bpt4 Petitioner c q

,

that slw occaslonally set up a laptop computer m his conference room. Petitioner s assertion ls

25 betmyed by the pictures of her of lce set up included in Mr. Montgomery's supplemental

declaration.

26 6 Respondent categorically denies the allegations in Paragraph 7 of Petitioner's Declaration and

11 o -lAel' similar allegatiops wherein she claims that Dennis Montgomqry told her that Responden

had requested tllat Denms Montgomery


52/178

.

1 Montgomery's bankruptcy estate and giving it back to Mr. Montgomery. The Petitioner fails to

2 understalld the nature of Mr. Flylm's purchase. As the motion filed by M1', Montgomery's

b lkruptcy trustee to sell al1 of Mr

.

Montgomery's assets to Mr. Flynn makes clear, M.r. F ymz3 al

4 purohased the Yarrow Point Property subject to a11 liens and encumbrances. Exhibit E, p. 6, to

5 Holahan Decl. The Yarrow Point Property is subject to a $2.4 million loan which Bank of

6 Amorica is currently foreclosing upon

.

Flynn Decl. 69 Ex. E, p. 4 to Holahan Declaration. lt is

.

7

also subject to a $26 million judgment lien in favor of e'rreppid. Flynn Decl. 6. rnAus, Mr.

8 Flynn could not 'sgift'' the Yarrow Point property to Mr. Montgomery because that propelïy will

9 sooll be foreclosed upon by Banlc of Amerioa as there is no way Mr. Flynn can or will satisfy the

10 defaulted indebtedness encumbering that moperty. What Petitioner ignores on this atready

1 1 collateral matter is tlzat M,. lqynn puwuased a lwmber o.f liugatioa czaims eom 'M,.

12 Montgomery'à estate that Mr. Flynn, as a lftigatol' and wlth extensive knowledge of Mr.

13 Montgolnery's business dealings

,perceives to have potential value. Flynn Decl. ( ( 3, 7. This

14 f

act is made clear in a review of the Sale Motbon as a whole. Ex, E to Hblahan Decl. As to her

.

15 claim that Mr. Mtmtgomery has moved baclc into the Yarrow Poin property, Mr, Monlgolnery

16 (lid that of his own volition and witllout the consent of Mr. Flynn. Flynn Decl. 9. Indeed, the

17 bankruptcyjudge administering Mr, Montgomery's estate approved his trustee's sale Motion

18 only on January 2, 2013, and tlw order approving tlzat motion has not yet been entered, nor does

19 Mr

.

Flynn even have a deed to the vanmw laoint propœ-ty. lqynn oecl, ( 8. Thus, despite

20 petitioner,s insinuations that Mr

.

Flynn somelaow improperly induced Mr. Montgomory to sigu

21 his declaration by çtgiving's Mr. Montgomery the Yal-row Point property and allowh4g Mr.

22 Montgomm'y to move baclc in, Mr, Flynn has not done any such thing and the records reflects that

23 Mr. Flynn and no authority to do any such thing. ln fact, Mn Flynn intends to pursue the

24 sa

Documents

Blix v YMC App # 98 | 12-35986 | Flynn Reply Re OSC