In Re: Gholam Reza Jazi Zandian
Debtor in a Foreign Proceeding
Case No.: bk-n-16-50644-btb
Chapter
15
This
transcript was originally made by GoTranscript (www.gotranscript.com). There were some
obvious errors that I corrected. There may still be some errors so always
compare quotes to the audio recording of the hearing.
There
are two philosophies for doing transcripts:
1. Make it completely faithful to the recording
will all of the Ums, Ahs, and verbal tics.
2. Clean up the Ums, Ahs, and verbal tics to
make it easier to read but without changing any of the meaning.
Since
this was my first transcript I did it the first way.
When
we bought the Court’s official transcript for a later hearing I found that they
did it the second way.
So,
in March 2021, after the Chapter 15 had been dismissed with prejudice, I redid
it.
There
may still be errors so the actual recording is the official record.
JM
THE COURT: Next we have Patrick Canet. C-A-N-E-T. 1650644.
[pause 00:00:07]
MR. HARTMAN: Good morning, Your Honor, Jeff Hartman on behalf of Mr. Canet.
MR. ABELMAN: Steve Abelman of the law firm Brownstein Hyatt Farber Schreck on behalf of Jed Margolin.
THE COURT: And
this is an application for recognition of the Chapter 15? This is the case
that's in
MR. HARTMAN: Yes, Your Honor. If I may, to begin with, when the case was filed, there was a glitch in the filing system. And when I talked with Miss Gallagher about this, the case shouldn’t be designated as Mr. Canet because he's the foreign representative who is seeking the order in this court.
THE COURT: This would be for Mr. Zandian?
MR. HARTMAN: Yes.
THE COURT: Okay.
MR. HARTMAN: So, I
spoke with them regarding the issuance of the summons and we got that
straightened out. And I've read the opposition filed by counsel. And I'll
certainly, the Court should hear from him, but, I think, based on what’s in the
opposition, my request would be to treat this as a status hearing and put
burden on me to obtain an order from the court in Paris as to the status of
that case and whether or not, in fact, the intention of that court is that Mr.
Zandian is also in a Chapter 15 in Paris. I cannot represent to you, Your
Honor, that that is, in fact, the case. So. That's my
position on behalf of Mr. Canet, as the representative of the Chapter 15 that’s
pending in
THE COURT: As opposed to Mr. Zandian, who'd be actually the main debtor for the cross-border insolvency.
MR. HARTMAN: Right,
and the point taken in the opposition, it's, I understand the point, and that
is that Mr. Canet was originally appointed in the Computer World bankruptcy
case, if that's what they call it, or liquidation proceeding in Paris. I cannot
answer the question honestly today, whether or not there has been a proceeding
in
THE COURT: That's vacation month.
MR. HARTMAN: That's vacation month.
THE
COURT: In
most of
MR. HARTMAN: Yes. And so--
THE COURT: They have a better system.
MR. HARTMAN: Yeah, they- well, they have a different system.
THE COURT: Mr. Margolin?
MR. HARTMAN: Thank you.
THE COURT: Sir?
MR. HARTMAN: I don't think he's Mr. Margolin.
THE COURT: I'm sorry, I apologize.
MR. ABELMAN: Steve Abelman on behalf of [unintelligible 00:03:15].
THE COURT: Mr. Abelman. My, my pro- my bad.
MR. ABELMAN: Your
Honor, I've traveled here from
THE COURT: Certainly. Please go ahead.
MR. ABELMAN: Gholam Reza Zandian is a clever and- clever and practiced in the art of deception. His actions over the last eight and a half years, which I will highlight, reflect an astounding lack of respect for the United States Judicial System. He ignores court orders and discards his counsel as it suits his needs. That is why we implore this Court to zealously guard the integrity of the judicial system with regard to this Chapter 15 filing. Now, I want to be abundantly clear, while I believe Mr. Zandian is behind this Chapter 15 filing, nothing I say is intended to impugn the integrity of Mr. Hartman.
THE COURT: Thank you.
MR. ABELMAN: I have
no reason to believe that he is a knowing participant in what I believe, is a
fraud, is an attempt to perpetrate a fraud upon the
Court. And again, Mr. Zandian has a long history of utilizing attorneys for his
own purpose. While Chapter 15 is designed to provide a mechanism for dealing
with transnational insolvency cases, its purpose is primarily to encourage
cooperation, where a citizen is sought in the
THE COURT: Is that the case here?
MR. ABELMAN: I would submit no.
THE COURT: Okay. So explain- explain that to me, if you would.
MR. ABELMAN: If I may just finish the definition--
THE COURT: Sure, sure, sure.
MR. ABELMAN: --and then I'll come back and raise the point as you requested. So, there needs to be a collective judicial or administrative proceeding in a foreign country. Number one. Two, under a law relating to insolvency or adjustment of debt. I'm not sure about whether that implies. And three, in which proceeding the assets and affairs of the debtor are subject to the control or supervision by a foreign court for the purpose of reorganization or liquidation.
So, quite simply, these defined
elements are not supported by the materials we have, and I think Mr. Hartman
has acknowledged that today. Element number one is the foreign proceedings, so
our position is, there's no evidence of a pending administrative or judicial
proceeding in
There is evidence that 18 years ago, Mr. Canet obtained a judgment against Zandian on behalf of Computer World. And that judgment was for upwards of 20 million francs. And as my papers pointed out, there's no bank that even deals in the currency of francs. That ended four or five years ago.
THE COURT: Maybe coming back, depending on the Brexit election today.
MR. ABELMAN: [laughs]
Well, actually,
So the assets-- there are
assets that are in play, that are- that's real property in this state, and my
point is that none of these assets have ever been part of any liquidation
proceeding, that we are aware of, in
THE COURT: Please.
MR. ABELMAN: Okay. So the initial lawsuit was in the United States District Court for the District of Arizona before Judge Raner Collins. And it was case number CD-00588. And in December 2007 Reza Zandian forged patent assignment documents, which were then filed with the U.S. Patent and Trademark Office.
THE COURT: Forged hack designer patents?
MR. ABELMAN: Forged- he forged patent assignment documents-
THE COURT: -I'm sorry.
MR. ABELMAN: So documents that purported to assign patents that belong to Mr. Margolin or his entities and he filed it with the U.S. Patent Office to reflect that the patents were assigned to entities controlled by Zandian.
That resulted in litigation
which culminated in a judgment against the Zandian entities in August of 2008.
So that was lawsuit number one. Lawsuit number two is here in
THE COURT: Can I see that? I apologize. I can't get to my docket here, so-
MR. ABELMAN: Okay.
THE COURT: You have them? Okay. So could you give a copy for Mr. [unintelligible 00:11:14] to Mr. Hartman. Yes, please mark this. I'm just going to mark this as an exhibit to this hearing so I can keep track of it.
MR. ABELMAN: So if I may take a few minutes-
THE COURT: One second. [background conversation] [unintelligible 00:11:40] going to do. Okay, thanks. All right. Thank you. Okay, go ahead.
MR. ABELMAN: I just want to take you through the highlights.
THE COURT: Sure.
MR. ABELMAN: And you can see that in March of 2011-- okay, as a result of the litigation in Arizona Mr. Margolin initiated a lawsuit here pursuing Mr. Zandian for damages. And in March of 2011, he obtained a default judgment against Zandian.
THE COURT: Okay. That's 3/1/11. is that correct?
MR. ABELMAN: Yes.
THE COURT: All right.
MR. ABELMAN: In June,
Zandian filed a motion to dismiss on special appearance claiming improper
service because he no longer resided at an address as it had been provided in
THE COURT: And who did he-- did he file that pro se or did he have a counsel?
MR. ABELMAN: He had counsel.
THE COURT: Who is this counsel?
MR. ABELMAN: His
counsel was John Peter Lee who I think is now deceased.
THE
COURT: He is.
MR. ABELMAN: So the court granted in part that motion and entered an order, setting it by the default but deny the motion to dismiss and granting an extension of time for service. But-
THE COURT: But that was-- that was a motion that serves by publication is that correct?
MR. ABELMAN: It resulted in that. So that was in August and then Mr. Zandian's counsel, Mr. Lee to declined to provide-- declined to accept service of process. And declined to provide an address. So, Mr. Margolian went back to the court and asked permission to serve by publication, the court granted that in September of 2011.
THE COURT: One second. Okay. 9/27/11, correct?
MR. ABELMAN: Right.
The following March law firm number one, Mr. Lee, filed a motion to withdraw.
And in the motion to withdraw he provided a
THE COURT: Okay. What- what was the date again? I'm sorry.
MR. ABELMAN: I believe it's October 31st of 2012.
THE COURT: Lots of activity before in the interim. So, October 31st, that's the -- that's the judgment?
MR. ABELMAN: Default judgment, yes.
THE COURT: Okay. Right.
MR. ABELMAN: And I'm, I'm not going to go-- I'm not going to bore you with all the- all the excruciating details, but just the highlights.
THE COURT: All right.
MR. ABELMAN: In about a year and a quarter later in December of 2013, law firm number two filed a motion to set aside the default judgment--
THE COURT: And what law firm was that?
[pause]
MR. ABELMAN: Your honor, I don't have that in my notes.
THE COURT: That's okay.
MR. ABELMAN: Okay. Filed a motion to satisfy the default judgment, number two, maintaining that the address provided by Mr. Lee was inaccurate.
THE COURT: But there wasn't any address provided by Mr. Lee.
MR. ABELMAN: He provided an address when he filed his motion to withdraw.
THE COURT: Okay.
MR. ABELMAN: As you know, when you file a motion to withdraw you have to certify that you have informed-
THE COURT: Notified your client.
MR.
ABELMAN:
So, that's the address that he utilized; a
THE COURT: Okay.
MR. ABELMAN: But he
had previously declined to provide an address for service or accept service of
process. So law firm number two filed a motion to set aside the default,
claiming that the
At the same time he was claiming that --he was getting checks and banks were sending correspondence to him at the San Diego address-- at the very time that he was moving to set aside the default judgment claiming he had never received pleadings that were sent to that-
THE COURT: And now with Mr. Margolin's opposition to motion to set aside of January 9th of 2014, is that what I received?
MR. ABELMAN: Yes.
THE COURT: Okay. Thank you.
MR. ABELMAN: In January of 2014 the court judge --the honorable Judge Russell-- entered an order granting Mr. Margolin's motion for a debtor's exam and to produce documents, okay? And it required Zandian to show up on February 11th. Mr. Zandian did not show up for his debtor's exam and Mr. Zandian did not provide any documents.
THE COURT: So, there was then-- I'm guessing, that date is not on the docket, but there was a motion for contempt, that was filed February 12th, would that be, where that's detailed?
MR. ABELMAN: Yes.
THE COURT: Okay.
MR. ABELMAN: In the interim, law firm number two withdrew.
THE COURT: All right.
MR. ABELMAN: Law
firm number three is Kaempfer Crowell. In February of
2014, Kaempfer Crowell filed an appeal of the order
denying the motion to set aside a default. And also opposed the pending motion
to show cause why Mr. Zandian shouldn't be held in
contempt.
THE
COURT: Okay.
MR. ABELMAN: Eight, nine months later in October of 2015, the Supreme Court for this state affirmed the district court on Zandian's appeals.
THE COURT: Hang on for one second. It's October you said?
MR. ABELMAN: October 19th of 2015.
THE COURT: Okay. Hang on, let me get to that. That's records over the performance of the defaulter basically, and they were [unintelligible 00:18:44]?
MR. ABELMAN: Right.
THE COURT: Okay.
MR. ABELMAN: And I know we're skipping around here, but-
THE COURT: That's all right.
MR. ABELMAN: In December of 2015, lawfirm number three, Kempfer Crowell filed its motion to withdraw.
THE COURT: Okay.
MR. ABELMAN: Now, I just want to bring your attention and I have a copy of the motion to withdraw which I'm happy to share with you. It says in this case defendant has not only substantially failed to fulfill his obligations to Kaempfer Crowell regarding iys services, but also insists upon taking actions that the lawyer considers to be repugnant or with which the lawyer has a fundamental disagreement, probably should have been "and with" rather than "or with". Your Honor I have a copy of that-
THE COURT: Yes. You have a copy for Mr. Hartman. We will mark this as exhibit two, and I'm going to leave these as exhibits two with my notes on them which are just basically checkpoints. But, may I see this?
Female Speaker: Yes, Your Honor.
THE COURT: Let me take a look. Give me a moment.
MR. ABELMAN: And the quote is on page 3 line--
THE COURT: Is it line seven, “furthermore” ?-
MR. ABELMAN: 18 to 22.
THE COURT: Okay. [pause] Okay. And the repugnancy language is on lines 7 and 8? Okay?
MR. ABELMAN: Yes. It's on seven and eight and 18 to 22.
THE COURT: Okay.
MR. ABELMAN: So, as of December 2015 fast forward February 2016. Judge Russell issued an order holding Mr. Margolin-- It’s a warrant of arrest.
THE COURT: For Mr. Margolin?
MR. ABELMAN: I'm sorry. It's for Mr. Zandian-
THE
COURT: Okay.
That makes more sense.
MR. ABELMAN: Let me put it- in regards to failure to appear, at the-- and I have a copy of that if I can-
THE COURT: I'd like to see it. I'm familiar with-- I know there's such a thing as a writ of civil arrest, but I don't think I've ever seen one. [pause] Thank you.
THE COURT: Alright--Thank you.
MR. ABELMAN: On May 3rd, 2016 Mr. Margolin filed a motion to void deeds. And that--
THE COURT: I don't think I have that.
MR. ABELMAN: I-
THE COURT: I only go through 3/4/16.
MR. ABELMAN: Three, four--
THE COURT: Yeah. The last thing I have says order dispositional.
MR. ABELMAN: Oh. That was-- I believe it's a separate action. It's appended to my objection-
THE COURT: Okay.
MR. ABELMAN: -as an exhibit.
THE COURT: Just wait a second, I can't pull that up. Could we see his objection? Do I have this here? Okay, sorry. Pardon me. Alright- is that exhibit three you said?
MR. ABELMAN: I didn't say.
MR. HARTMAN: I think it's Exhibit B.
THE COURT: I'm sorry. Thank you. Quite a day.
[pages turning]
[0:23:41]
THE COURT: So, Mr. Hartman I just have a question-
MR. HARTMAN: Yes, Your Honor.
THE COURT: Who have you been retained by in this?
MR. HARTMAN: Mr. Canet.
THE COURT: Okay.
MR. HARTMAN: I pronounce Canet.
[pause]
THE COURT: Well
let me ask you this-- you suggested at one point in your earlier argument
whether Mr. Zandian does not have property in the State of
MR. ABELMAN: No, he does.
THE COURT: Yeah, okay.
MR. ABELMAN: Well, he has property that he has-
THE COURT: Transferred to somebody else-
MR. ABELMAN: -Conveyed-
THE COURT: Improperly.
MR. ABELMAN: -to his family and friends.
THE COURT: Okay.
MR. ABELMAN: And that's the subject of the motion to void deeds.
THE COURT: I've never seen the term dirtied title before either.
MR. ABELMAN: I had never either so I just assumed it was part of the vernacular in this state.
THE COURT: Thankfully not yet. [laughs]
MR. ABELMAN: I'll have to ask my co-counsel-- my colleague where he came up with that.
THE COURT: Okay.
MR. ABELMAN: Okay.
So the motion to void deeds was filed by Mr. Margolin. So, he's been chasing
after Zandian, for now, eight and a half years. And he's located a property
that Mr. Zandian owned in
THE COURT: Now let me ask you this has he filed a lis pendens against the property?
MR. ABELMAN: I don't specifically know. I-
THE COURT: He probably ought to that if-
MR. ABELMAN: -I would agree.
THE COURT: if he hasn't.
MR. ABELMAN: I would
agree. Okay-- Now this is what's very suspicious. The chapter 15 petition was
filed on May 19, really two weeks after the motion to void deeds was filed. So,
you have this judicial liquidator, purportedly Mr. Canet in-- in France who has
done nothing, that we know of, that we can find, to
further his collection efforts against Zandian in
And then two weeks after we filed this action, the chapter 15 is filed. So, it seems extremely suspicious. Now Mr. Hartman acknowledged earlier that there are some questions that he agreed that he would take the burden of answering. I would suggest that the questions may be a little bit more far reaching and it would help all concerned to have these questions answered. And that would include: if the judgment-- the chapter 15 preceding is premised upon what the English translation says --judgment of three April 1998. So, question number 1 is that still viable under French law?
THE
COURT: Or
even
MR. ABELMAN: Or even US law? Right. Two, is there a French insolvency preceding pending with regard to Zandian? Or is it merely a judgment that Mr. Canet is trying to collect against Zandian? In which case he should have no higher priority than any other judgment creditor. Is there a French insolvency proceding wherein the real estate in this state is being administered? I don't know French insolvency law.
THE COURT: Nor do I. And I don't speak French. So, that can be more of a problem.
MR. ABELMAN: I speak [foreign language] a little, not enough to be able to be of any utility. But you would think that there would be some schedules, some pleadings that referenced what assets of Zandian are being administered in that action. So, there should be something in here less than 18 years old and better yet current, docking sheets, schedules that shows both that Zandian is a debtor in that, not just the judgment-- not just a judgment debtor, but part of an insolvency proceeding. And two that that insolvency preceding somehow incorporates the assets in the real property that is the subject of the of the current motion to void liens. Okay?
So those are questions that we believe need to be answered by this court for a chapter 15 to proceed and just to clarify, if Mr. Canet just wants to participate in participate in litigation in this state as a judgment creditor, then we don’t necessarily oppose that as long as Mr. Canet is who he purports to be. We're not trying to prevent him from exercising whatever rights he may have as a judgment creditor. What we don't-- what we're trying to prevent is that somehow our action to recover assets fraudulently conveyed is stopped by a Manchurian bankruptcy.
THE COURT: Okay, thank you. I have a couple of questions is that I'm trying to sort through this. Do we know-- I mean Mr. Hartman, do you know if Mr. Canet has a judgment?
MR. HARTMAN: I cannot personally tell Your Honor the answer to that question.
THE COURT: I understand and I actually can't get to my docket so I can’t look at it but the only other cross-border insolvency case I had I got some pleadings from the whatever her-- Her Majesty's Court in Canada, which-- it certainly has the world’s biggest stamp on it of authenticity. With me, that's the most biggest and certainly it was the biggest one I've ever seen. Is there anything similar in this case that we have?
MR. HARTMAN: The only thing that I have in my possession is the English and French document that I attached to the petition.
THE COURT: Okay, you may well be right. I'm going to give Mr. Hartman some time to figure out where he stands. I mean he may be as much of a victim of this individual as anybody else Mr. Zandian but I'm going to continue this for 30 days. I will make a decision at that point. Mr. Hartman I am sorry.
MR. HARTMAN: Sure your honor. And thank you, and I think that’s probably the first time that Manchurian Bankruptcy term has been coined. And- [crosstalk]
THE COURT: Yes.
MR. HARTMAN: -with that term-
THE COURT: And dirty-izing property. [laughs] Is also a first for me.
MR. HARTMAN: I've written down the questions that Mr. Abelman presented and that should be answered and let’s assume for a moment that everything he has said about Mr. Zandian is accurate, and knowing Judge Russell as I do, I believe there's probably a legitimate basis for everything that Judge Russell did.
THE COURT: Judge Russell was Mr. Hartman’s brother's partner for 30 years.
MR. HARTMAN: For many, many years and the only-- What I like to place on the record and draw the Court's attention to is docket entry five. I know you don’t have the docket up.
THE COURT: I'm sorry.
MR. HARTMAN: And it would be pages 11 and 12 and it’s-- and I don’t know what terminology to use for this but it says at the bottom of the page-- docket entry page 11. "the court may open judicial re-organization or liquidation proceedings with regards to managers whose liability etcetera. Whereas the court considers it appropriate to apply the provisions of the above-mentioned text of law and open judicial liquidations proceedings against Mr. Zandian with all the legal consequences there are."
I cannot tell you if that, in fact, happened at the, contemporaneous at the time that this order was entered but I owe it to your honor and to Mr. Abelman and his client to find out that information which I will do. So I will communicate with my co-counselor in Paris very shortly and pose these questions and ask them to produce whatever documentation they have that either supports Mr. Canet’s position with respect to Mr. Zandian or not. And I will file it with the court and certainly provide counsel with a copy. And if, if there are no further need for a hearing then I certainly don’t want one.
THE COURT: Certainly.
MR. HARTMAN: But I
don't have enough information to inform your honor about the status of the
proceeding in
THE COURT: Okay, so what do we have in about 30 days? I'm assuming it’s not going to be, well, I know that the French also do electronic transmission of stuff, I'm guessing, but it usually takes more than a day or two to get information from people from courts-
MR. HARTMAN: Yes.
THE COURT: From people from courts so 30 days-
Female Speaker: Your Honor, we can do August 10th, in the afternoon and I'll block the rest of the afternoon.
THE COURT: Okay.
Female Speaker: 2:00pm. we have a couple of motions, we have Yellow Tab confirmation, but that will probably be confirmed. so
THE COURT: August what?
Female Speaker: 10th, it’s a Wednesday at 2:00 pm and we’ll block the afternoon for you.
MR. HARTMAN: What I would propose your honor is that I have a deadline in advance of that date-
THE COURT: Yes
MR. HARTMAN: --so that Mr. Abelman doesn’t have to make arrangements to come.
THE COURT: No,
no. So let’s set your response date 7 days prior. I know that’s a little short
but you can respond to that. Obviously, if there’s nothing going to happen or
nothing you need to add, Mr. Abelman, or you can
certainly appear by phone. I don’t want you running around for no purpose even
though
Well, two days prior to the hearing so I'll also have the chance to look at it so that would we Monday prior to the hearing that you would need to file it. And we’ll just go from there.
MR. HARTMAN: And if I can get the answers to these questions much earlier than that I’ll certainly provide them the answers.
THE COURT: Yeah.
MR. HARTMAN: And if there's no need for a hearing I'll certainly let the court know.
THE COURT: And I certainly can’t tell from what we’ve got whether or not there is a French judicial proceeding or not because I don’t know enough about French insolvency law and I don’t read French.
MR. HARTMAN: Thank you, your honor.
THE COURT: Thank you very much. You think there'd be some sort of stamp?
MR. HARTMAN: Right as some sort of what?
THE COURT: Some sort of seal or stamp like the British do. Maybe the French aren't as good at stamping things as the British.
MR. HARTMAN: Well maybe they need to learn from the Canadians right.
THE COURT: And they build from the Canadians. Well, they don't consider themselves British but they seem that we are.
MR. HARTMAN: Or French.
THE COURT: Or French. Thank you very much for coming. Hope the trip wasn’t too difficult for you. So thank you, nice having you and I will see you guys in about a month.
Both Counsel in unison: Thank you, Your Honor.
THE COURT: Thank you very much.
[00:37:41] [END OF AUDIO]