Mastro Update: Linda Mastro Files Reply Brief

Here is Linda Mastro’s Reply Brief. It’s very pithy, and can be summarized in three short paragraphs.

Argument 1: The Fugitive Disentitlement Doctrine does not apply, because it is not necessary that Linda be present for these issues to be adjudicated.  Where’s your authority on that Gossler?  No case law is cited in the brief.

Argument 2: No evidence to suggest Linda had anything to do with the missing gold, Rolls Royce shenanigan, or the missing money from the Chase account.

Argument 3: Evidence all says the jewelry was Linda’s separate property.

Finally, here’s a link to a recent Seattle Times article about Mastro’s whereabouts, and a potential criminal indictment.

Rigby Files Brief in Linda Mastro Appeal

The brief is well written (here it is), with two basic arguments.  First – and the lead argument – is that Linda Mastro essentially loses the right to appeal by virtue of having left the jurisdiction and taken property that belongs to the estate.  She can’t willfully refuse to obey the court, while at the same time, expect to receive relief from it.  This is called the Fugitive Disentitlement Doctrine.  See Wengin Sun v. Mukasey, 555 F.3d 802 (9th Cir. 2009).  It appears this doctrine is usually applied in criminal cases, but Rigby cites authority that it has also been applied in civil cases.

The second part of Rigby’s brief is simply that there was sufficient evidence presented at trial to support the court’s judgment that the rings, gold, Rolls Royce, etc. was not Linda Mastro’s separate property, and thus is properly included in the bankruptcy estate.

Here’s what we think will happen:  The District Court will apply the Fugitive Disentitlement Doctrine, and affirm the Bankruptcy Court’s judgment.  By doing this, it will not need to address whether the facts at trial supported the judgment.  If the Court gets to the issue of whether the facts support the judgment, we think Rigby is on shakier ground.  While there is a lot of contradicted testimony by Linda Mastro on the jewelry, and indeed, her credibility is lacking, a gift is a gift (and from what we’ve seen, that’s what it was), so long as it was made when Mike Mastro was solvent.  Do we really believe that Mike Mastro intended to keep an interest in jewelry he gave his wife?  The evidence that Rigby cites is Mike Mastro’s having controlled the jewelry for awhile, but that seems weak to infer that he had an interest in it.  It sounds more like a bailment, if anything.

We keep coming back to how Linda can appeal, yet also be on the lam.  If Mike Gossler is unable to reach Linda does his ethical duty require that he file an appeal on her behalf to protect her interests?  Or if she’s incommunicado, can he ethically represent her interests, without receiving her specific direction?  Or is she in communication with Gossler, directing the appeal from afar?  And is he getting paid?  If so, with what money?  Our experience opposing Mike Gossler in litigation has shown us he is good, professional and ethical.  We assume whatever the facts, he’s doing what he should do under the circumstances.

Linda Mastro Files Appeal Brief

Linda Mastro attorney Michael Gossler filed what looks like a hastily prepared appellate brief.  No pun intended, but it’s pretty brief – touching on community property law, prenuptial agreements, estate planning and appellate review standards, all very complex subjects, without a whole lot of analysis. (We suspect this is good evidence Gossler is not getting paid and is making his best argument with little to go on).

Recall that the trial court ruled that the jewelry was not her separate property and thus subject to the court’s jurisdiction.  Linda Mastro’s brief argues the trial court erred in this respect – and that all the evidence shows that the jewelry was her separate property.

As for the judgments against Linda Mastro related to missing property, like the rings, gold bars, and money from an LLC, she argues that was error too.  She argues there was no evidence presented at trial that she had any control or even had knowledge about any of these transactions, and that the signatures related to these transactions, which purported ot be hers, were not actually hers, but Mike Mastro signing for her.

As it stands now, Linda Mastro remains on the lam, assumedly (but not necessarily) with Mike.  Also we assumed she has possession of the jewelry (or sold it, and has the cash), which the trial court ruled is not hers.

We can’t wait to read the Trustee’s responsive briefing.

Harry Dorssers (of Monaco) Seeks to Block Distributions to Creditors

Hendrik “Harry” J. Dorssers and Concept Dorssers – who are Mike Mastro creditors – filed an emergency motion in the U.S. District Court for the Western District of Washington, seeking to block the bankruptcy trustee, Jim Rigby, from distributing approximately $2.8 million to unsecured creditors.  The Seattle Times reported on the anticipated distribution here.

Here are the facts:  In December, 2008 Dorssers loaned $1.2 million to the Mastros, secured by real property.  (Mike Mastro is pictured above.)  The note rate was 10 percent, callable “on demand.”  Dorssers were in second position.  After receiving their deed of trust, they realized they were not sufficiently secure, there being insufficient equity in the real property.  (See TEP’s upcoming post on “Classic Mastro & Hazelrigg Maneuvers.”)

So Dorssers threatened to call the note.  Mastro then offered up his Medina home as new security, and signed a new note for “as much as may be disbursed to or for the benefit of [Mastro] to a maximum of $12 million.”  This blanketed up the house from other creditors.

Rigby sued Dorssers, claiming that the loan was a fraudulent conveyance – meaning that Mastro either intentionally hindered other creditors while he was insolvent, or did not receive equivalent value for what he gave up.  In other words, the loan was a sham in order to protect Mastro’s assets from other creditors.  See TEP’s older post on asset protection/fraudulent conveyances, here.  Rigby won.  Dorssers has appealed.

In the meantime, Rigby is set to distribute the bulk of the bankruptcy estate to creditors.  If Dorssers wins the appeal, and the money is already distributed, then Dorssers could be left high and dry (unless Rigby wants to personally make Dorssers whole).  Hence the request to block the funds’ distribution pending the appeal.

The emergency motion is a good read, and well written, and available for download here.