Rob Lambert: Today, I am honored to be able to moderate a collegial discussion between two superpower litigators. One will be trying to pierce a well-done action asset plan, and the other will be trying to defend a well-defined action asset trust. Our two gladiators, who are both good friends of mine, are Paul Brown and Randal Edwards. Here are our boys, Paul Brown on the left, and Randall Edwards on the right.<\/p>\n

I am personally being represented by both of these men, they are people that I trust I know well. Paul\u2019s case, he has probably defended way over half of dozens of my clients, way of over half a billion dollars of money. Some of it, almost unlimited budget litigation, and 100% success, and he know how to defend an asset protection trust. He also knows how to break them. He has gone offshore to several places to attack, same with Randall.<\/p>\n

Randall has represented a substantial number of my clients. All were 100% success, one of them, still alive and kicking at more than a thousand properties and for closure, and that worked out well for our client. Randall and Paul are collegial each other, Paul is representing the dater, the person who has the asset protection trust; and Randall is representing a huge Fortune 100 company trying to destroy or to collect on a large debt. Paul, Randle, you want to say any think about yourself, before I go over the fact pattern of the war of the worlds.<\/p>\n

Paul Brown: I prefer Randall first, depending on what Randall says, and I\u2019ll follow up.<\/p>\n

Randall Edwards: My name is Randall Edwards, lawyer I had been for the last 30 years almost. I practice in South Lack city, Newtown, I have offices here. I also practice at Nevada, California, and Arizona. I also have affiliate office in Brazil. I do a lot of international work, mostly in Latin America. I speak Portuguese and Spanish. I spent a lot of my time either on phone or on Skype, discussing various matters with my South American clients.<\/p>\n

My experience is generally, a litigator. I am a litigator, since, I got my law degree. I have always believed that in order for you to be a good transactional lawyer, you probably also need know your way around court. Every time I put together any kind of a transaction, whether it\u2019s a state plan or asset protection plan or a contract, I start with a presumption that somewhere along the line, it\u2019s all gonna fall apart. When you do that, you have to kind of a say when it falls apart, what am I gonna do? How am I gonna put it in front of court?<\/p>\n

How are, 12 people, who are one of my cynical judges get out of jury duty? How are they able to understand this? I can make it work. So, I think usually in order to make something work, you need to be able to make it down in such a way that somebody who does not know anything about your case, or anything about your client, will be able to understand; and you can let them figure out, so that’s how this should be done. So, that is kind of my background. I think you probably lookup my resume, on the assetprotectiontraning.com website. I\u2019ll now refer you to Paul, who I also know, happen to be a very good litigator, and a very good planner as well.<\/p>\n

Paul Brown: Thank you for those kind words, Randall, and in the same way, my name is Paul Brown. I am a partner at Seattle firm at Karr Tuttle Campbell. I am throughout the scene, I can\u2019t believe it. Over 20 years. I am someone asking all time, why you keep on practicing, why don\u2019t you ever perfect your craft? The answer to that is, quite honestly, No, because the things are changing, so often so much. The primary focus of my practice over the last couple of decades has been litigation both onshore and offshore, complex transitions, financial fraud, both defending, and, piercing, and recovery. I too like Randall, I think Randall, not the same like were too collegial; but his perspective on being good transactional lawyer understanding litigation also, all works the other way around.<\/p>\n

I have done a lot of transactional work in my former life, offshore, primarily with raising funds, and banking work in Taiwan, in the late 90s and early 2000; and after that I had the opportunity to do more asset protection work. As well as recently in the last five years, I have done a lot of asset recovery work.<\/p>\n

Time quintessential litigator, I am a switchiater, if you know, and one type lawyer; going for the particular problem you know, fix it, or take it, or deal with it. And you know, you move on to the next. I think, Rob and I do have an interesting history, and years ago in one of our matters we did talk about, how we will identify what we were doing; and really what we were doing in a way, to notice with respect to law enforcement, but to keep in perspective, we were an illegal swat team, very mobile. We were able to compile a king of experts, forensic accountants, international tax people, state planners and litigators, and they were brought forefront on the structural issues, and we went into the particular area of state in our country to give it a status of swat team. We were successful in that matter, that I would have craft our people identify, my practice. With that said, the other thing I think that is important to understand, or I know Randall and Robert agree with this.<\/p>\n

While we represent our clients, once we are advocators, we are warriers and gladiators. One thing I will not do, and I Know Randall will agree, Rob, we do not engage in unethical behavior, or conduct. Our ethics are higher than what our bar associations require, it is important that clients understand full disclosure necessary; so we understand that what the problems are and then we can address them. The things that are hidden and not full disclosure, we can\u2019t help those people. Sometimes we do represent people that have problems, that need to be dealt with; but when we have disclosures we deal with them in an affective matter. So, I kind of say that as a footnote, it is important that those who are listing and understand, that the ethics or morals are practices, are the first and foremost and are pinnacle to what we do. I go to bed at night, knowing I do a good job, but I don\u2019t worry about doing something that is improper. I am not gonna do that.<\/p>\n

Randall Edwards: You know I am gonna add this to that Paul. We talked about this before. There is also an aspect to any law practice, where ultimately you have to like the client. I mean they don\u2019t have to be your best friend, but you need to be in a position that when they either give you a call or knock at door, you just don\u2019t just shatter. I had a case not long ago, in one of the jurisdictions which I practice, outside of Newtown, He called me up. He was a doctor, and he says well, he say that he is married to this women for the last 30 years, I am sick of her, I got somebody else, I want to get out of marriage, I just want to get out of this thing, and basically I don\u2019t want to have anything out of it. And, you know I put some money away here, and I put some money away there, and yea we have got kids together; but basically,<\/p>\n

I wanna hose her. He said, could you help me? Well, the answer to the question will probably be from the legal point of stand. Yea, there are couple of things I could do to help you, but I just can\u2019t stand what you are doing. I can\u2019t stand to what it is you want to do with this woman, who is the mother of your children. Yea, I could probably do something for you from the legal stand point, but from ethical standpoint, I just can\u2019t do it. You have to find somebody else, so best of luck; but I am no gonna be the guy, who is gonna representing you, trying to really undercut this woman, who stood on your side for all these years, simply because you happen to find someone else later on down the line.<\/p>\n

Paul Brown: I couldn\u2019t agree with you more on that as well. I think that is very well said. I do get a lot of calls. I don\u2019t take everybody in call, with I take it very recently. I think that if you don\u2019t embrace or like your client, then you cannot be passionate about what you are doing. I think, Randall, you would agree with this, judges and juries smell that; and they also smell when you have a passionate advocate that believes in the cause. They are damping, and that is very very important as well.<\/p>\n

Randall Edwards: Yea we\u2019ll talk about this little later on, but motive does matter. They matter to juries and they matter to judges, they matter to lawyers. Because in the end, it is not just a matter of bunch of rip words on the page that just fell out of the sky, and we look at them and apply them. Like, let\u2019s say a gum ball sheet. You put it in your quarter. You pull the lever and out come the gum ball. A lot of people think this way the law is. They put them in facts, they pull the level and somehow the results gonna come out.<\/p>\n

Well , No you are dealing with the human beings. If jury or the judge comes to the conclusion that your guy is just isn\u2019t that savory or he just not being fair, or he is trying to screw the poor creditor out or whatever it is he signed out, before knowing that he gonna do it. It really doesn\u2019t matter, what the law is, as far is the ladder of the law.<\/p>\n

You are gonna find some way that their sense of justice in the sense of equity is going to be served, and I think that is also true of any lawyer. There are some lawyers that I know who would take anything, as long as the guy can pay the bill. I know I am not one of those. I know that Paul is not one of those, because motives do matter, and they ultimately matter, in any kind of aspect. It does not matter, what you are dealing with, whether it is a divorce, or a business aspect or you know; whether you get somebody to a personal injury, in a medical malpractice case. I mean motives will matter to the point that, if you can\u2019t believe in it, you cannot be make a jury to believe in it; and you cannot get a judge to believe it.<\/p>\n

Paul Brown: I think, is interesting not to our fact pattern here. Well, I do agree with that perspective. I also think that, in my former days- I used to do criminal precaution, decades ago, and in some criminal offence. I mean, I have more problems in acquiring, that state, you know in a criminal matter, requiring them to meet their verdict, same thing in the defense of an asset protection challenge. I have no problem in making sure, that the plan to pass to meeting their verdict. I think that keeps a good balance in place. It also, you know save your way into the Shakespeare quote that is always misquoted, about the first thing you need to do is to kill all the lawyers.<\/p>\n

In proper context you read that, I think it is out of King Lear. Those who are listening, if I am wrong, please correct me, but if you want anarchy that is what you do. The point is, there is balance that is been made here too. I think, the fact pattern we have before us, one main thing and assume I guess that assumptions could be bad here; but assume looking at this, Randall really is representing the justified party on this and I am representing you know, could be better identified scum bucket. I think that is different from that. I think as we go to our discussion you\u2019ll see my point much clearly. With that I think may be Randall your turn, Rob you wanna do your job and move on.<\/p>\n

Randall Edwards: I just want to correct that one thing, I have read that Shakespeare play, and I thought what it was, that the first thing we do is kiss the all lawyers. I think that it is time to introduce what facts pattern it is, so we can go at it.<\/p>\n

Rob Lambert: Yes Sir, Randall and Paul. Both write that good asset protection, and good litigation never requires you to be immoral or unethical. It is never stealth but you never have to be unethical. While you cheat or steal, and here we go, this is the caveat, that both of are fancy and wonderful litigators, have asked me to show to you. Bottom-line, don\u2019t believe a word they are saying, they are not representing you, they are not rending any legal advice, don\u2019t assume or relay upon what they say. Hire somebody.<\/p>\n

Randall Edwards: Offer any other reason.<\/p>\n

Rob Lambert: I don\u2019t want to read it to you, but there you are done. Here are the facts, I am gonna read it to you\u2026. Paul Brown represents a newly minted internet millionaire Joe Nard. Now Mr. Nerd just received a patent which he thinks will change the face of mobile computing and he sold this patent to BIGCO, a Fortune 100 company, sold it for fifty million dollar cash ($50,000,000.000). In connection with this sale, Mr. Nerd signed numerous representations and warranties, including one that he had clear title to the patent and the power to transfer it. Mr. Nerd agrees to work for BIGCO for two years following the sale and to remain in California, were he lives during this time, very common provisions. The patent was bought with a single payment of $50,000,000.00. Prior to this sale Mr. Nerd settled an asset protection trust in Belize. He sued that he had no creditors, just head. He put $five million cash in a Belizean Bank, $40 million into a major Swiss bank and bought a $5 million dollar home in Beverly Hills, all owned by his asset protection trust. The Trust had a single Belizean Corporate Trustee, an English Barrister as the Proctor and Mr. Nerd and his heirs as the sole beneficiaries.<\/p>\n

Randall Edwards: Almost done<\/p>\n

Rob Lambert: At that time, Mr. Nerd did his planning because he wanted to get married to someone called Fanny and start a family. He wanted to protect his hard earned money from future unanticipated creditors and his new wife. Everything went along fine for a few months. Fanny fell more deeply in love with Mr. Nerd, because a Pilate\u2019s instructor and started taking acting lessons, also very typical.<\/p>\n

BIGCO, excited about the new technology, proceeded with the development of a new type of mobile phone\u2026., Until\u2026, another giant company called PHONECO., notified BIGCO that the new technology for the patent actually belong to PHONECO as the original idea was developed when Mr. Nerd was in intern at PHONECO. Upon investigation BIGCO determined that PHONECO just might be right and that the development of the new mobile phone had to stop. Mr. Nerd had breached his representation and warranties. BIGCOS\u2019s Board was furious and hired, the biggest, baldest, meanest, and the most expansive Simon agreed litigator in the world, Randall, no surprise that is you.<\/p>\n

Randall Edwards: I am pretty surprised about that.<\/p>\n

Rob Lambert: To get their $50 million back, their instructions (Get Our Money, at any cost, don\u2019t care win). As long as that\u2019s typical boards, they spend money, they are big fancy enough, spend enough money, it is hard to accused them of not taking to their ethical duties. So they hire Randall Edwards, give him a limited budget and said go get Mr. Nerd, who is represented by Paul. So, Assume in this litigation, that each party has unlimited budget, each party is well done, Each party has a right undersigned, any of you watching this will see, when you will hear discussion from both sides. There are a lot of decisions and there are a lot of strategies. Either Party can win, there is no such thing as an unpierceable asset protection trust; or there is no such thing, as an absolute predictable outcome. Well guys all are gonna be blessed, when you will hear these two amazing litigators, talk about how to discuss this. Now, here is a diagram that I am gonna put that on screen. Once Paul and Randall will start talking, and you can see, we have right here Mr. Nerd, the protector. Yea that may be important maybe. We have a Belizean trust company, with a single trustee, not a connection plan or two.<\/p>\n

We have an offshore protection, who is an English Barrister, and here you see at the bottom, we have the assets. The square represents the trust. It has a very simple structure, now I\u2019ll put this next slide up for a minute. Well you can see it Paul representing, Mr. Nerd. Randall representing, BIGCO deal with who to sue, where to sue, theories, expectations, budgets. I am gonna not suggest to them anything, because they have been through to million times, you\u2019ll find all sorts of other issues coming up. Now, I am gonna turn it to our two geniuses, and I am the judge by the way, in case you take anything to court. I will render a judicial decision, if they bring anything to me, otherwise, I am client, OK guys take it away.<\/p>\n

Randall Edwards: Well, I think that first thing we need to clarify, when you call me genius. I\u2019ll always gonna worry, not actually because, I am a genius but because I don\u2019t actually work at the apple store. The only place, I know you can be paid for being is called a genius. Yea, there are couple of things we need to indicate to our listeners at the outset; this is going to be more kind of a couple of guys, as if we were in a conference room and with respected offices, I just did this yesterday, in a matter of fact with one of the lawyers with whom I share some office space. We were trying to figure out a very complicated limitations issue. One of them stick on one side, and one of them stick to the other side; and then we sort of switch sides, because we want to try an analysis things are.<\/p>\n

The first thing I want to say, that if I have been hired by BIGCO to represent Mr. Nerd, I want to make sure that they understood that this is going to be an extremely expansive and time consuming process. No one should ever be under the illusion that to break an asset protection plan is either simple, or it is even one it is not put together particularly well. Lets presume that is put pretty well, even if it is not very well put together. It is going to have its challenges. We have to pursue , in this case, various jurisdictions, even if you have pursued one jurisdiction. It will be very difficult situation. I could see that you got the graphic of the trust up there for the listeners, who may be unfamiliar with a trust or how they really work. You will be really surprised. I actually sometimes have to educate judges on how a trust actually works.<\/p>\n

They took a course somewhere along a line on trust about 30 years ago, when they were in law school; but they were really not listening, they were staring at the girl in front of them, and they really don\u2019t understand it, and I always explain to people in very simple terms. For me, a trust is nothing more than a day at the beach. Let\u2019s suppose that I have got Rob Lambert and I am hanging out at the beach and I say, hey Rob, I’m gonna go around the corner down there. I saw some girls, and I wanna go and look  for a minute. My wife will be here in a couple of minutes, and what I want you to do as she gets here, I want you to take this suntan lotion and give it to her.<\/p>\n

Rob says, ok that\u2019s good. I take up down the beach, and Rob hangs on the suntan lotion, that point a trust has being created. I am the grantor of the trust and I am the guy who is giving something to the trust. Rob is the trustee of that trust, he is the one that I have given it to; but I have not given him to use for himself, I have given it to him for the benefit of someone else. My wife is the beneficiary and when she shows up, she\u2019ll get the suntan lotion.<\/p>\n

The Suntan lotion is the purpose of the trust. So you got me the grantor, you got my wife the beneficiary, you have got Rob who is the trustee; and you can see, if you look at this graphic up there are also couple of other things that you don\u2019t often find this kind of really simple trust- at the top you could see the protectors. Now most trust that are put together, in United States, for example you have heard of a living trust where you put your assets into a trust, so that you can help the succession of your assets, as in the state planning.<\/p>\n

You won\u2019t have necessarily have a protector, but a lot of asset protection trust or the trust deal with offshore entity you\u2019ll have to have a protector. That is, as kind of the second, insurance policy, that protectors kind of a sits on the trustee shoulders, and make sure that the trustee is doing what his is supposed to be doing. Here we have got an offshore protector that is in Britain, and then we also have another that is actually is Mr. Nerd. Now back to my beach analogy. If we had, let\u2019s say that Paul is on the beach with us and I say hey listen, you know that I know that Rob is a forgetful guy, and when my wife shows up he will be so dazzled by her brilliance and beauty, he may forget to give her the suntan lotion.<\/p>\n

Will you make sure that he does that? If he doesn\u2019t, you find somebody who will, that is actually, usually what a protector does. Basically, he sits on the shoulder of the trustee. They make sure that they do what they are supposed to do, but they don\u2019t have any powers to do it for themselves.<\/p>\n

Usually, what they will do, is they will have only very limited power, and that power is usually either to give rid of the trustee and appoint somebody else, or to make sure that the trustee is actually carrying out the duties that they are supposed to be doing. Now let\u2019s play down to some of the things that we would do. The question you have asked, who to sue, where to sue, what am I theories and what am I expectations? Well, Alright, we get down to who to sue? Well, obviously, it is not so much matter of who to sue, but what is that I want. My company has given me a specific goal, \u201cGet our money back\u201d. Well, how is it that I am gonna get the money back. Obviously, the obvious person that I wanna sue is Mr. Nerd. Mr. Nerd is the one, who I am gonna claim that he fraud at me, and that he misrepresented, and that he has actually, may be taken stuff that he is not entitled to.<\/p>\n

He’s got 50 million dollars of money, which he should not have and not only that he has compounded that by taking money and hiding it, so that I can\u2019t get to it. Well I can sue him, but if we look back at that structure. There we go, we look at that and we say wait a second that is nice, but if I get him what am I gonna get. Well let\u2019s see what he has got, he has got 5 million dollars home in United States. He has got Five million dollars in Belizean Bank. Two big banks in Belize, I doubt with both of them are Bank of Belize and Provident Banks. It is gonna be one of those or may be nomination of the two. The 40 million dollars in the Swiss banks and there are tons of Swiss banks, which I know Rob have a lot of experience with.<\/p>\n

Well, what I really want is, I want the money. I don\u2019t necessarily need my Nerd  having him tacked up on the wall, because it won\u2019t do me any good. Well, what can I get immediately. Well, here onshore within the jurisdiction of a court, there is only one asset there that I can immediately get, and that is his home. So I can sue him in California, and I can try and get an injunction against him. I\u2019ll talk to you about what elements of an injunction are in just a minute. But the only thing, really, I got immediately access to are his home, and lets presume that 5 million dollar home actually has a five million dollar worth of equity in it.<\/p>\n

Paul Brown: this is a big assumption.<\/p>\n

Randall Edwards: yea exactly, this is a big assumption.<\/p>\n

Paul Brown: Let\u2019s assume that this assumption is incorrect.<\/p>\n

Randall Edwards: Ok, alright. Let\u2019s presume that he bought this house of 5 billion dollars, but he has got leans of four and half million dollars against it. It is only five hundred million dollars of equity and he may be able to take advantage of home state exemption. Every State in the Union has a home state exemption. Some very very generous, such as Florida and Taxis, where there is no amount that is not exempt from your home. So very stingy, such as the jurisdiction that I practice in, Newtown home state exemption is just pathetic, I think, it is just 20 thousand dollars. So it may well be that even if he has got Beverly Hills home, there is not much that I can get. Frankly, I much rather get cash than get a home anyway. Especially, in today\u2019s market, because a home is gonna be difficult for me to live with it. BIGCO can\u2019t really do that much for the home. They may be able to turn around and try and sell it.<\/p>\n

Even if they get it, but if that is not that really wonderful you can get- so then we are gonna look at, well what are the other things that I can get. I can go after his five million dollars in a Belize bank and I can go after his 40 million dollars in Swiss bank. How it I am able to do that. Actually, I gotta tell you Paul Brown have quite a bit of success in doing precisely this , you go after what\u2019s known as injunctive relief. Now, let me explain me in terms of an average jurist can understand. If I am shooting at you house from my house, there are two ways – two things you can do. You can sue me, and you can say, I wanna get damages , I wanna get money for all the damages that you done to my house. I want dollars for that. But the other thing what I am most concerned about is that I want you to stop shooting, you could really do some massive damage to my- you could hit somebody, you could hurt somebody. So you can go to court, and there are two abalones there, the legal abele, the remedy at law is money. The equity remedy is, I want you to stop shooting. Now, the American courts have jurisdictions to do both of those, and often they will not give you an equitable remedy, if they say your remedy at law is adequate.<\/p>\n

Well, you sue me. I\u2019ll go and say, I don\u2019t stop shooting. You have got an equitable remedy at law, if I kill somebody, you can sue me for that then you can get whatever it is that I have got. You say, that is not good enough, that is not good, that is not an adequate remedy at law, because, I don\u2019t want to take chances, if you go and killing me. Well, when you look at this kind of a situation, you go in and you ask the court for an equity remedy, and in that case it will be an injunction. Well, were you will go, you will notice that at the bottom of that page you have got- some of the money is in Belize, which is outside of United States and some of the money is in Switzerland. You can\u2019t go to an American court and try to get any kind of remedy for them, because they are not gonna get jurisdiction over a Swiss bank and they are not gonna have jurisdiction over Belizean bank.<\/p>\n

But there is couple of things we will talk about later- things we could do in United States, but let\u2019s just talk about the money right now. Well there is a legal remedy, where you go to the court and there is a sort of a practical remedy. The Legal remedy is that you could go to a court, and try to get what is known as a mareva injunction. “M A R E V A”, That comes from a case that is from British Commonwealth, and that is you go and ask the British court to issue an injunction that will freeze all of the assets. It is actually called -I think freeze order. I think the mareva injunction comes from a case. It is called somebody versus a mereva, and mereva versus somebody else. There have been various places that had been very successful. In fact , there was a case, 34 years ago, Exon Mobil got mareva injunction against Venezuela oil company and they got it was billions of billions of dollars; and they just got freeze all of the assets, and they said ok. They can\u2019t move it, they can\u2019t do anything with it; and those assets are stat put, where they are until I can\u2019t figure where they ought to be. Now, there is couple of problems with that. The first one is, there is very difficult to get. Second one is going to be jurisdictional.<\/p>\n

As far as getting an injunction, you have essential to be able to proof the entire case right on the onset; and you to be able to say I am entitled to judgments, all of the equities are on my side, what this gut did was wrong, he is way out of control, I am entitle to judgments and you better freeze those assets because if you don\u2019t, he’s gonna take him and I am never gonna see them again. In order to do that you have to go in, and you have to get that from a court. Now, I am right now referring to Paul to little bit to talk about what the defenses would be to mareva injunction.<\/p>\n

Paul Brown: Well, I think, there is a whole bunch of stuff going here. That is legal for whole bunch of stuff going on. Randall have you not already sued me on my client in United States.<\/p>\n

Randall Edwards: I don\u2019t know the answer to that, the answer to that may be. Let me tell you from my technical aspects stand point why I may or may not want to do that. The one thing that I don\u2019t want to have happen is to him to move money to a place where I can\u2019t get to. Let\u2019s say that I know somehow, either through answers to interrogatories that I have sued him or that I found out some way that I know what money is.<\/p>\n

Well usually these trusts are going to be so flexible that as soon as there is that rift that somebody may be out of it. If you want to get the trustee can move it, so that 40 million dollars may all be in Swiss bank today, and may be in the Cooks Islands the next day, and somewhere else the next day, in such a way that unless I freeze it. I won\u2019t ever be able to tack it down. So, it may well be from a technical standpoint, I even do or do not want to sue him simply because I may not want to give notice to him that I am on this trail, and spook him, so that the trustee moves the money.<\/p>\n

Paul Brown: Paul, if you do sue him does have that notification, and within the trust document I think there is a better chance that where you are looking for the money. It is there<\/p>\n

Randall Edwards: Yea, I agree, I agree<\/p>\n

Paul Brown: I also go the red alert status a direct clause, the proctors of change. The new protector can now chance the beneficiaries under the instrument, a trustee chanced and we are saying go go and run around. I think fundamentally, there is a big problem and that plaintiff BIGCO faces here and that is was the structure initially effectuated. As and in appropriate manner, in other words did Mr. Nerd setup his offshore trust properly, to begin with. Is there a threat that we needed to be considered of, whereby you can be attacked on the structure itself? ?Based upon the facts, as I would is obviously would say Mr. Nerd setup his offshore trust and the fact pattern says that we have got unanticipated creditors at the moment and there is nothing that you can aspect at the time.<\/p>\n

Therefore, you set the trust up for wealth succession in state planning purposes not to defraud or any shape or fashion, any legitimate creditors. It is interesting to say, you know what you should have anticipated that there could be a creditor with BIGCO, and there the operative term on this are legitimate creditors. I would argue, that there are no legitimate creditors that can unravel or uneven offshore trust at the time that we set it up.<\/p>\n

Randall Edwards: Let me jump in, I am gonna talk about that issue. I think that you are right about it, I think that It’s a fundamental primary issue. Is the trust gonna be valid?<\/p>\n

Your argument would be- this would be my argument if I had more anticipated creditors, certainly nobody legitimate, and you know he simply put the same thing together in anticipation for getting married. You knew there might be some creditors out there, but it’s gonna be enough. You know I was representing BIGCO, which in this case for our purposes. My recommendation would be that he knew that at least there will be a legitimate claim by them. When he started stealing their technology, and he certainly could have anticipated that; this big company that he has been working for, that he see litigation all the time was not gonna put up with that and gonna go after that. So he was trying his best to try to undermine them, I agree.<\/p>\n

Let me finish that and then you can go ahead. Let\u2019s get back to the issue that \u201cOf course motives matter\u201d if he says that he had no ill motive when he put this thing together. I think that he probably will have good chance of having that trust paying together. If I say that- wait a minute, that these motives were bad, his motives from the offset will be, cheat these people, and then hide the money trying getting to it. I think there is a better chance to unravel a trust.<\/p>\n

Paul Brown:  I think that burden on will be significant all just for a second, but first let\u2019s go to the fundamental barrier. I would call it, variance to entry. I would also argue that BIGCO is trying to get an easy way out on this mess, and really we got a whole bunch of problems, in intellectual property issues. The dispute at the moment is PHONECO and BIGCO and we are also making assumptions, huge assumptions on the validly of the patent that is need to be challenged under technology, on issue that whether or not Mr. Nerd is indeed the inventor. We need to have challenges, and they will try to invalidate the patent if ESPGO because I think that the patent talks about the patent issued in this technology, there are going to be multiple multiple fights on that.<\/p>\n

We will hire great IT litigation consolers to make those arguments. Quite frankly, I think those are the legitimate defenses that also used to support our contention that the trust was setup validly, and it was setup with the intention of sate planning and wealth procession purposes.In what setup with the intention to provide for future family of Mr. Nerd had nothing to do PHONECO and those problems? If it did- OK fine, we got few millions in the pockets to have you go away, but you are not getting that 50 million and the noting to do with that. The pinnacle issue on whether or not the money was got in some kind of fraudulent activity hasn\u2019t been adjudicate at all. If it is adjudicate, and if we lose, we will appeal that you are nowhere near offshore at the moment. You need to stay onshore on that issues at that time we got notice of those problems, and we gone to red alert status and the money where you think is, does not exist, it is not there, that will be barrier number 1, 2, 3 probably OK.<\/p>\n

Randall Edwards: Let me talk little bit about this barrier, because you are right. There is a huge barrier when you are alleging there is fraud. When you allege fraud in a case in United States, and same is going to be true anywhere else, you have to show with particularity. What that means, that is a legal term basically for saying, you have really really really got to have your ducks in a row. It is not just go to the court and say you- this guy fraud me. You will have to be able show what is it that I relayed on. Was it reasonable that I relied on it, particularly was said or done I relied on it? Was it reasonable for me to have done that? It is a very very high standard. Now as I said, that when you are looking at an injunction, you have to go in, and show all of that to court.<\/p>\n

So, whether we get offshore with a mareva injunction or whether you are onshore with a domestic court you got very very high standard, and Paul is right. In order for us to prevail, we have got to be able show that there is fraud, and at that time BIGCO has to enlist PHONECO as its ally, to be able to say\u2026<\/p>\n

Paul Brown: Sorry to interrupt you, that was exactly my point. If BIGCO wants to prevail in this matter, they need their competitor as an ally.<\/p>\n

Randall Edwards: Yea, and that is going to be very very difficult. I mean that because if PHONECO comes in and says, yea we want to enlist with you against this guy. They have now gone in gun with their own competitor against somebody that may never be able to beat levy against. It may well be that PHONECO would not wanna do that, they wanna comeback and say wait a second PHONECO and BIGCO. We got a good case against them. They should have done their due diligence, they should have make sure that these facts were good. They should found out, they should have done something because the BIGCO gonna have the deep pockets than MR. Nerd is. That is going to be very difficult and specially if you are going to get an injunction. You are be able to show that you are going to win. You got PHONECO\u2019s help in order for you to show that you are gonna win, and I think that is a very big hurdle. You have something else to add Paul.<\/p>\n

Paul Brown: Yea, I have couple of better thoughts. Let’s talk about the injunctive relief aspect. I don\u2019t see where you can prevail on a inerrable harm component of a domestic conjunction. Based upon the facts as we got it, as we go we can\u2019t hold point to the fact that this is PHONECO and BIGCO dispute all and we are successful, but we will meet that argument further for you to prevail offshore and try to get a mareva injunction. One is the hirer verdict proof on it. It is kindle most to be beyond reasonable doubt. Two the bonds on this will be astronomical is the argument; but 3 the more importantly, you have to have in terms of legal significance verifiable proof that badges of the fraud exist. I don\u2019t know that you can get that, and if you got that component of it. Now Mr. Nerd may have to be concerned about. But how fast how soon, what degree and to what expense can you obtain that type of document that kind of information and that kind of testimony, I frankly don\u2019t know. Further, I think if let\u2019s say Nerd is a bad guy. Let\u2019s say for arguments, his intent was to be fraud.<\/p>\n

We all know that the 5 million dollar Beverly Hills home entitled in that is now held by some LLC who is never happens to be in what we call IBC International Business Corporation offshore somewhere. Not that you can protect real-estate to any degree of certainty in United States. But you certainly put some traditional barriers there. It used to be there than we used to be and we take in substantially all the value out of that, prior to the litigation. The 40 million in Swiss bank isn\u2019t there, it is gone. It is gone for quite some time, The Belizean account where we have to Belizean trust that just placeholders. I mean we have got 5 to 10 thousand bucks  to keep the things up. That is about it, and our protector has been moved as we have said for change and for selling the instrument the trustee is different to the instrument; and also the beneficiaries are challenged perused to the instruments and so BIGCO has got problems some big litigation problems in that\u2026<\/p>\n

Randall Edwards: Let me interrupt you for a second so that our listeners will have some idea of some of these technical terms that we talking about are. When we talk about Burdener proof, most people understand burdener proof to what they watch a lot in a criminal case. They say, wait well a minute, unless you can\u2019t show something beyond some reasonable has not been proven- well it is kind on scale and in a simple case where you got a let\u2019s say a traffic accident, all you need to show is call preponderance of the evidence, and if it is more likely than not. When you are dealing with fraud you have heightened kind of a proof. I need to be able to show that there is a higher degree. If you put in on a scale of 100, 51% will be preponderance of the evidence and the highly pleading standard for fraud will be somewhere, may be 75. The beyond reasonable is somewhere around 95 to 99, and you are right that when you are in an injunction you are probably be in that 80 to 90 percent range. You have to show that you have a reasonable likelihood of success on the merits. As a result, a lot of court will require you refer to as a bond they will come in and say yea, recommend and say well yea- wait a minute, if I freeze everybody asset and as a matter of fact you lose.<\/p>\n

These people will be out of money, these people will be out of the interest they could have got on it money. They will be out of whatever investments they could have made with that money. I am gonna  come up with a bond, and you have to find an insurance and bonding company will come with it. You have to get money on your own and give it to the court so that if you are wrong, you can make up for the damage that you caused. There is also going to be what Paul just pointed out, a real disincentive. When Paul talks about the instruments, let\u2019s remember that they might be speech analogy, that was just telling that is it what I wanted. When you actually settle a trust, there is a trust document, and that document will be the instrument. It will be a settlement document, it basically turns out to be a contract. It is a contract between that grantor, and the trustee. The beneficiary has some rights under that, and it can be very flexible document as Paul pointed out. It can be what Paul refers to as the direct clause, which means that if we look to the Belizean trust company or an offshore protector, but there is going to be a treat to the trust, or to the corpus of the trust. They are not only entitled, but they are actually instructed under the trust instrument, that settlement document, that contract. But, they got to move the money. They got everything they can to make sure, that the corpus of that trust that money in that trust remains protected. That may mean that that trustee resigns, or it may mean that that proctor resign and there will be some contingencies in that document. I am sorry to interrupt. There is something else I am also gonna talk about, the protector. But when you finish, I\u2019ll talk about- we can even get jurisdiction for merave injunction. In a case like this, where you don\u2019t have any of the party\u2019s other than perhaps the offshore protector the British citizen, the barrister, who actually be the subjects to any kind of the court order from English court\u2026<\/p>\n

Paul Brown: Yea and I think we neglect the two on and offshore jurisdictions. A bound is also require to be posted for the other side of internee seat, not just the bound to protect there is an injunction lawsuit issue; but you know contingency details recognized offshore lose your pays most commonly.<\/p>\n

The guiding instrument, if you will, you have to be mindful of additional expanse. Further, if some type of injunctive relief is sought- I mean there is got to be some type of nexus relation between both, established that the party seeking the injunctive reseals, in this case BIGCO has entitlement to that money. In other words, they have a right to that money. The argument is that they have that right because what they say was a fraud that Mr. Nerd was engaged in the obtaining the money from BIGCO. Now that is gonna be litigate offshore, that is to be litigated in Commonwealth jurisdiction by Commonwealth lawyers; and those lawyers are gonna be charging, you know, in some instance of these jurisdictions a thousand bucks. It is not gonna be that simple and pain free exercise assuming that there is someone prevails. To begin with, all that time there is no freeze, all that time that money is able to moved and transferred. Now BIGCO would argue that if they are able to move transferred illegally, and we argue. No that is not the cause because I think that one of the key factors here. If I am representing a party that is being sued, and Rob knows that well, that the question, the threshold question. The first question out the door is, does the defender, in this case Mr. Nerd, and has any viable defenses, OK. Does he have, I mean what I call in the past, blue face test.<\/p>\n

In other words, I can get in front of court not having my face turned blue. In other words legitimate sustainable- well talked you know, and defenses, and if he does, ok that is an extreme barrier as well to recovery. It is also an extreme barrier to any argument that the trust structure should be unrivalled ok. There are defenses based upon the fact pattern we have here, but let\u2019s take it to the extreme. If Mr. Nerd is indeed a corrupt, let\u2019s say this was a purchase of an asset for value, for example and let\u2019s says this was a patent, and let\u2019s say it was an investment scandal, a Ponzi scheme a made of type situation, ok, everybody, ok.<\/p>\n

I hope all listeners are familiar with that. That is a whole different situation, that is a whole different sets of circumstance. What defenses does he have? He does not have many in this instance. Based upon the facts that the public is aware of, and I don\u2019t know any additional details, I am sure that counsel has a reservation barriers. So let\u2019s presume that there are no defenses, now, in that fact pattern, Randall has got a whole different set of options and less barriers of penetrate and can\u2019t indeed, much more of likelihood of the success will be much more readily available to him. But in this instance, I am going back to whole domestic structure here, with the pattern involved, and the purchase for value. We are assuming that BIGCO did their true diligence might have been faulty and might have problems with it, but none the less they have part in 50 million dollars and it is huge amount of money.<\/p>\n

I have already talked about some of those differences on the conversation regarding all the intellectual issues, which by the way we just kind of a whole separate discussion- whole separate topic presentation, is the word about how that would actually come into play in a barrier because this is the defenses. I will be comfortable that came to me and say do we have defenses, based upon the fact pattern, yes you do. There is the question. What is the cost of the success for that? Well, now on this matter, I am 50\/ 50. 50 is worst, I mean at art because of time, and the effort, and the abbreviation, and the expanse.<\/p>\n

Randall Edwards: Let me just follow-up on one thing that you said. We will talk about the defense, and it is that the motive matter and the facts matter. I wanna refer to our listeners to two particular cases. Every asset protection planner is familiar with. One is called an Andrewson case and one of them is called the Lawrence case. The Andrewson case was 9th federal circuit case that came out in 1999, and you had some bad people.<\/p>\n

They have setup an offshore trust, in which they put the whole bunch of money with a Ponzi scheme. They came up to a judge and they made a really mistake, and that was that they angered the FTC, the federal trade commission. They came to FTC and said, if we are not only to get our money but, if we try to get it, you know there is no way that we can get it. It\u2019s gone and there is something we can do about it. They looked at them and said that you know you might be right, your money is offshore, there is no question about it. It is in the Cook islands, it was setup there and that money is put away there. I can\u2019t get to it, I can\u2019t force Cook islands to count it up. Now there is a judge, anybody from the Cook islands, who is here that I can get?<\/p>\n

But you are here and as long as you are here, I have power over you Mr. and Mrs. Andrewson.  I am gonna hold you in contempt to court because I don\u2019t believe that you legitimately put this money in the trust, and I don\u2019t legitimately believe that you can get it back. So well I can\u2019t order it back, you can get it back and order the trustee, and I think that you can.<\/p>\n

Regardless of what the trust instrument says, I am going to put you in jail until you do, and he did. Ultimately they now  settled, and interestingly, they settled less than the total amount that was in the trust, and I guess you can say it was a win for both sides. The other one is the Lawrence case and that was about 2002, and it was a similar situation- and now I don\u2019t need through both of them. But in both of those cases we had bad people. I believe that Paul is right that it is much more likely that you going to be able to prevail against the bad guy than against at least arguably good guy.<\/p>\n

The way rob setup this fact pattern, Mr. nerd is not so obviously, not horrible that you look at it and say the bad guy got to be in jail and we have got this bad guy and shoot him up against the wall. Paul is right that makes my case against him a lot more difficult because I can\u2019t simply storm him to court and say this guy is just as tinted as he come, as he just be taken out and killed and you better do something about it.<\/p>\n

Paul Brown: I think that is an important distinction here. That character you are talking about, the bad guy you know would have cautioned to anyone listening. Council will represent that individual at least to be very very careful. That is why you got to set your best client out- potential client out, with extreme caution. In any of these situations to make sure he don\u2019t have that problem and that kind of also goes back even in the introductory comments we made about that the kind of the individuals and the people we may present. You know. I don\u2019t represent those kind of people, I don\u2019t have a stomach, I don\u2019t be passionate about it and I don\u2019t feel good and I can\u2019t go back to home to my wife to my daughters and say I have a good case. It leads to bad taste in your mouth. In this cause though, there is a lot of a lot of fluency going around. Quite frankly,  this is the case that will based for settlement. You know I don\u2019t know that BIGCO will take that settlement, but that is something we will offer up with the understating with PHONECO with them that they are gonna get. They are not gonna get any more and they may disagree with that and may say, fine you could try. What we are offering you for the settlement is  you are gonna spend part around the county and the world on this because we do have the defenses, because we do have the ability want you to and we can legitimize our positions on this. I don\u2019t see anything in the end that on a- I guess broad brush will invalidate the structure.<\/p>\n

Rob said in the being ok, and I wrote these down, the operative, well done and well defined trust. Well that is the case in one of the, when dealing with the competitors out there, that setup trust in a pretty good spot. That\u2019s also brings up another component to the listeners. If you are someone that is looking at setting up an asset protection trust, you need to find out those people you are working with. Something I am not gonna pull Rob to a ridicule degree, but one thing that Rob has done with my clients is that, he makes sure that he works with the tax lawyers, the senior CPAs, the state planning people, so everybody has an understanding what we are going, and we are going about setting up this trust. So we don\u2019t have the threshold track on the trust structure that is kind of little bit we were successful on a matter domestically, a number of years ago, and also actually a hundred percent recovery for our client and the strategy was to sue completely domestically to not go offshore, as well as keep it within the compound of the United States and we were tacting is that we were actual structure itself and we also brought all the professionals that were part of the common scheme of plan and that worked. In this instance, again if we change the fact pattern a bit, and it is not a well-defined and a well- done trust and we are talking about a wide spread scam on this, and if we were talking about Mr. Nerd is not even the adventure, he did indeed steal the technology.<\/p>\n

He then did utilize the services of patent council and commit a fraud fact offices and to get a patent issue use to be the fraud of the conduct, by promising them you know X amount of dollars under the table. He has paid off the CPAs, and the other barriers, and those people have all taken the money, now Randall has got a decent domestic game setting in front of him. For the change on discussion, I would like your words on what is your though on that Randall.<\/p>\n

Randall Edwards: Well I think that you are right. One of the questions that come out looking at unwinding a trust structure is when it is done, and what dies to grantor hold, at the time it was done, If he know that BIGCO is about to sue him or even worst. If he decides to setup structure after BIGCO has sue him. I am going to have a much easier way of being able to say it\u2026<\/p>\n

Paul Brown: You are.<\/p>\n

Randall Edwards: That would be seen as a fraudulent transfer, that is the term of art when you are dealing with asset that does not necessarily mean that there is actually fraud involved. It does mean that you are trying to get money away from the legitimate creditor, and the court will regularly unwind those. If it is that situation, it will be very easy for a court to just come in and say no, Sorry, that trust is not any good\u2026<\/p>\n

Paul Brown: I am gonna say that is my threshold question that would be asked by the practitioner, is Mr. Nerd you know, I got a know your client. The KYC component you know is there anything expected, what air your creditors, what are your legitimate assets and debts and things like that. To evaluate indeed are we gonna setup a trust that would end up being old and cold, meaning that setup that indeed for wealth succession and for asset protection purposes. If you have that circumstance, you know these are very good vehicles for protection down the road for some crazy, that they will turn around and sue. Let me make one more comment and then Randall follow up, what we are talking about. The case is that Randall referred to, yes, will know, but that is kind of MacDonald coffee case. What I mean by that, I think the listeners are not engage in my age if you will, but those who don\u2019t know I might be ten years old right now I think. It goes to a lady who sued called, I don\u2019t remember the degree significance burn by stealing copy on her and I remember people were up about how terrible a legal system is, that such a thing can in happen, and the point is that is an extreme that is not the norm that is not the regular situation that we find in a lot of personal injury matters. I think the example that you gave Randall, I forget, but I remember Anderson. Those are extreme causes and that is not our fact pattern here. As well I don\u2019t think that BIGCO would be successful in getting the court to order Mr. Nerd to return funds. First of all they got a  huge assumption that BIGCO is entitled to that funds, ok. All of them, or they are gonna hold them in contempt and the second component of that is assuming Mr. Nerd remains in the United States. He says lots of people like Australians, lots of people like Italian and in Europe and the Mediterranean areas. I suspect the also you know there is a that lack component that is gonna come into play.
Randall Edwards: I think that you are right. I want to talk about the KYC the New Year client. I always thought that\u2019s KFC yes usually, what I\u2019ll do is go and get a bucket and chicken this chicken is everything really everything.<\/p>\n

Paul Brown: Yea\u2026 Yea\u2026<\/p>\n