# Appendix — Millan, In Re (No. 90-155)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1990

## Text

2 i] FYLED
90-155 _—

JOSEPH F. SPANIOL, uR,
CLERK

a a

I
No.

Im the Supreme Court
OF THE
United States

OCTOBER TERM, 1989

In re RICHARD MILLAN, Petitioner

APPENDIX TO
PETITION FOR A WRIT OF MANDAMUS/
PROHIBITION TO THE UNITED STATES
DISTRICT COURT FOR THE CENTRAL DISTRICT
OF CALIFORNIA,

AND THE HONORABLE EDWARD RAFEEDIE, AND
THE HONORABLE WILLIAM J. REA, JUDGE OF
THE UNITED STATES DISTRICT COURT FOR THE
CENTRAL DISTRICT OF CALIFORNIA

Richard A. Millan
Counsel of Record
In Propria Persona

12922 Harbor Blvd. #749
Garden Grove, CA 92690
(213) 661-1556

TABLE OF CONTENTS

APPENDIX TO

PETITION FOR A WRIT OF MANDAMUS/
PROHIBITION TO THE UNITED STATES

DISTRICT COURT FOR THE CENTRAL DISTRICT

OF CALIFORNIA,

AND THE HONORABLE EDWARD RAFEEDIE, AND
THE HONORABLE WILLIAM J. REA, JUDGE OF

THE UNITED STATES DISTRICT COURT FOR THE

Appendix

CENTRAL DISTRICT OF CALIFORNIA

Page

A

Order (dismissing appeal and
denying Appellant's request

to stay proceedings), U.S.

Court of Appeals for the

Ninth Court, filed June l,
nn arr hoe A-1

Order Denying Leave to Amend
Complaint, U.S. District

Court, Central District of
California, dated April 19,

Res ca ee ee es eee a kee oe 0 A-3

Order Denying Motion to
Disqualify Judge Rea, U.S.
District Court, Central

District of California, dated
BES 20s SO a 6b ewe cee ees A-6

Order on Motions for Partial
Summary Judgment; Findings of
Fact and Conclusions of Law
Thereon, U.S. District Court,
Central District of

California, dated December 6,
SR es er ae ete A-9

Page

Excerpts from United States

Court of Appeals For the

Ninth Circuit Civil Appeals
Docketing Statement.......... A-26

Order (dismissing appeal),

U.S. Court of Appeals For

the Ninth Circuit, filed

February 9, 1990............. A-29

Chronological Chart for the

Years 1983-1987 To Show the
District Court the Multiple
Schemes and RICO violations
Perpetrated by Defendants

in this Aetigh.. i4.65%.00 ce A-31

Court Docket #62 Facing Page
(Plaintiff Richard Millan's
Notice of Motion and Motion

to Recuse the Hon. William J.
Rea Judge of the United

States District Court,
Affidavit of Prejudice,
Certificate of Good Faith,
Filed Concurrently with
Notice of Motion and Motion

to Disqualify and Recuse
Attorney Steven Lubell,
Declaration of Richard Millan,
Statement of Facts and Points
and Authorities. ..4sscceccria A-57

Excerpts From Professor

Brewer's "Mandamus Power,"
Buffalo Law Review, Vol. 31,

1982 at pages 68 through

Lh Prarie A-58

A-ili

Page

J Excerpts from Mercury

Service, Inc. v. Allied Bank

of Texas, 117 F.R.D. 147

(C.D. COL. TOT) ecccccccccees A-62
K First Amendment to the

United States Constitution... A-83
L Fifth Amendment to the

United States Constitution... A-84
M Excerpt from Reporter's

Transcript of Proceedings.... A-85
N Calif. Rules of Professional

Conduct, Rule 5-200.......... A-101
O Calif. Rules of Professional

Conduct, Rule 5-220.......... A-103
P Calif. Rules of Professional

ComGuct, RUG 3-300. cccccesec A-104
Q Calif. Rules of Professional

Conduct, Rule 5-310.......... A-105
R U.S. District Court Motion

Hearing on May 9, 1988....... A-107
S Excerpts of Court Record 62,

Pages 24 through 29,

paragraphs 36-45......ccccees A-109
T Local Rule 2.6.4 of the

Central District of

EI cd te 6 ee 6 6 8 604.0 68 A-119
U Calif. Rules of Professional

Cememet, RUS FrosOS.ccccvscss A-120

A-iv

BB

cc

DD

EE

Calif. Rules of Professional]
Conduct, Rule 7-107.....ccecs A-122

California Business and
Professions Code § 6068(d)...A-123

Excerpts from ABA Model Rules
of Professional Conduct...... A-124

California Business and
Professions Code § 6128...... A-126

Harassment of Opposing
, 55 POPPPeTer TETTCTCETTTTee A-128

Excerpts of Court Record 87,

page 17, paragraph 30,

through page 19, paragraph

D6 a00t en ebseeteadecemsonkesees A-137

Excerpts of Court Record 12,
page 33, lines 6 through 27,
and page 34, lines 1 through
Bs 606 664066 643006 Sb 6U4E SOOO A-140

Court Record 8l Pages 2
Through 22 Direct Rebuttal to
the Testimony of Marsha
Bennett and the List of
Predicate RICO Acts in this

Excerpts from Reporter's

Official Transcript of
Proceedings, Monday, June 13,

| SR A-229

Excerpts from Letter From

Uday R. Sawhney, CPA to Murray
Gardner Dated July 21,
ee re eee ee ee A-232

FF

Chronology of the Efforts by
Millan to Obtain an Order
From the District Court on
the Disqualification of

PS S| Pere rr rs . ree

Page

FILED JUNE 1, 1988

UNITED STATES COURT OF APPEALS
FOR THE NINTH COURT
RICHARD MILLAN 88-5972

DC# CV-87-2283-WJIR
Central California

Plaintiff-Appellant

Vv

MARSHA BENNETT
et al

ORDER

)
)
)
)
)
)
)
Defendants-Appel lees)
)
)

Before: HUG, BRUNETTI and NOONAN,

Circuit Judges

“Appellant requests that this Court
stay the district court proceedings
pending his appeal of the district
court's order entered April 21, 1988,
denying leave to amend his complaint and
refusing to extend the discovery cut-off
date. This is not a final, appealable
order under 28 U.S.C. §§ 1291, 1292 or

the collateral order doctrine.

APPENDIX A A-1

“Accordingly, this appeal is-
dismissed for lack of jurisdiction.
Appellant's request for a stay is
denied."

APPENDIX A A-2

ee

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

RICHARD MILLAN ) CV 87-2283 WIR
)
Plaintiff ) ORDER DENYING
) LEAVE TO AMEND
v ) COMPLAINT

MARSHA BENNETT,
COLLEEN S. STEIN-
BAUGH, RICHARD W.
STEINBAUGH, MURRAY
GARDNER, BONNIE
GARDNER, FASHION
EMBROIDERY, INC.

Defendants

ee ee a ee ee ee ae ee ee ee

"This matter comes before the Court
on plaintiff's motions for leave to
amend his complaint and to continue the
discovery cutoff and pretrial conference
dates. The court having considered the
papers filed in support thereof and in
opposition thereto and having heard oral

argument,

IT IS HEREBY ORDERED that the

motions are DENIED.

APPENDIX B A-3

The Court finds as follows:

"The propriety of a motion for
leave to amend is generally deter-
mined by reference to several
factors: (1) undue delay; (2) bad
faith; (3) futility of amendment;
and (4) prejudice to opposing
party. v. Retirement und

Trust etc. 648 F.2d 1252, 1254 (9th

Cir. 1981).

"The Court has previously
ordered the parties to complete
discovery by April 18, 1988.
Plaintiff seeks two weeks before
that date to amend his complaint to
add eight additional defendants and
ten additional causes of action.
Many of the same claims have
apparently been raised by plaintiff
against the same parties as cross-
claims in an older state court

APPENDIX B A-4

action. Based on these facts, the
Court finds (1) that the opposing
party would be significantly
prejudiced by the magnitude and
timing of the proposed amendment;
and (2) that the amendment is
untimely since plaintiff knew or
should have known of these claims
and parties at the time he filed
the action.

"For all the above’ reasons,
the motion for leave to amend the
complaint, as well as the motion to
continue discovery cutoff and
pretrial conference dates, are
DENIED.

“Dated: April 19, 1988
WILLIAM J. REA

UNITED STATES
DISTRICT JUDGE"

AP! ENDIX B A-5

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

RICHARD MILLAN CV 87-2283 WIR(Tx)

Plaintiff ORDER DENYING
MOTION TO

Vv DISQUALIFY
JUDGE REA

MARSHA BENNETT,
COLLEEN S. STEIN-
BAUGH, MURRAY
GARDNER, BONNIE
GARDNER, FASHION
EMBROIDERY, INC.
Defendants

"Plaintiff Richard Millan brought
this motion for a new trial and to
disqualify Judge Rea on June 13, 1988.
The Court, having carefully read and
considered the papers and pleadings. on
file and the governing law, hereby
denies plaintiff's motion.

Plaintiff moves to disqualify Judge
Rea pursuant to 28 U.S.C. § 144 on the
grounds that Judge Rea has a_ personal
bias or prejudice against the plaintiff.
A violation of § 144 requires that the
bias or prejudice of the Judge be both

APPENDIX C A-6

personal, i.e., directed against the
party, and extrajudicial.

~ In the instant case, the plain-
tiff's motion is legally insufficient.
Plaintiff fails to specifically allege
facts to support the contention that the
Judge exhibited bias or prejudice toward
the plaintiff stemming from
extrajudicial sources.

United States v. Silba, 624 F.2d 864

(9th Cir. 1980). For the same reasons,
plaintiff's claim pursuant to 28 U.S.C.
§ 455 and plaintiff's constitutional
claim are denied.

Defendants Marshal Bennett and
Colleen Steinbaugh request that the
Court impose sanctions on plaintiff
pursuant to Federal Rules of Civil
Procedure Rule ll. The Court does not
find sanctions warranted.

IT IS SO ORDERED.

'
~

APPENDIX C A

The Court further orders the Clerk
to serve copies of this order on all

parties by United States mail."

Dated: August 26, 1988

Edward Rafeedie
United States
District Judge

APPENDIX C A-8

es

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CV 87-2283 WJR
ORDER ON
MOTIONS FOR
PARTIAL SUMMARY
JUDGMENT;
MARSHA BENNETT, FINDINGS OF

RICHARD MILLAN )
)
)
)
)

COLLEEN S. STEIN- ) FACT AND
)
)
)
)
)
)

Plaintiff

Vv

BAUGH, MURRAY CONCLUSIONS
GARDNER, BONNIE OF LAW THEREON
GARDNER, FASHION
EMBROIDERY, INC.

Defendants

"This matter comes before the court
on the motions of plaintiff Richard
Millan and defendants Marsha Bennett and
Colleen Steinbaugh for partial summary
judgment. The Court having considered
the papers filed in support thereof and
in opposition thereto and having heard
oral argument,

IT IS HEREBY ORDERED that plain-
tiff's motion is DENIED and defendants’
motion is GRANTED in part, and DENIED in
part.

The Court finds as follows:

APPENDIX D A-9

BACKGROUND

Plaintiff, Richard Millan, brings
this action against Fashion Embroidery,
Inc. ("Fashion") and several individuals
who were associated with the company:
Colleen Steinbaugh (hereinafter "Mrs.
Steinbaugh"), Marsha Bennett, Murray
Gardner and Bonnie Gardner. The com-
plaint asserts several violations of the
Racketeering and Corrupt Organizations
Act ("RICO"), i8 U.&.C. Sec. 1962 et
seq., along with pendent claims for
conversion and intentional affliction of
emotional distress. Mrs. Steinbaugh and
Bennett now move jointly for summary
judgment as to the RICO claims against
them. Millan has filed a cross-motion
for summary judgment against these two

defendants.

APPENDIX D A-10

es |

Fashion was founded in 1978 by

three couples: the Gardners, the
Steinbaughs and the Williams. Each
couple was issued 30,000 shares. In
October, 1983, Millan, a potential

investor, was referred to the Williams,
who were selling their interest in the
company. Millan met with the Williams,
but alleges that he did not buy these
shares at this time because he wanted
nothing less than a controlling interest
in the company.

The Williams referred Millan to

Mrs. Steinbaugh as another prospective

seller of Fashion shares. The
Steinbaughs were in the process of
getting divorced and, according to

Millan, were devising a scheme to file
separately for bankruptcy after the
divorce and to hide their ownership of
the shares in Fashion. Millan alleges
that he was told by Mrs. Steinbaugh and

APPENDIX D A-1l

by defendant Marsha Bennett that Mr.

Steinbaugh had already achieved this by
nominally selling his 15,000 shares for
$20,000 to Mr. Gardner, who paid for the
Shares indirectly from corporate funds
and who was allegedly to give back the
Shares once the bankruptcy proceedings
ended.

Mrs. Steinbaugh was also looking
for someone to purchase here 15,000
shares. Millan met with her and,
incidentally, met Mrs. Steinbaugh's
daughter, Marsha Bennett, for the first
time. Millan and Bennett were married
two months later, in December, 1983.
Millan alleges that Bennett continually

solicited him to buy her mother's

shares. At this time, however, Millan
had yet to purchase any shares in
Fashion.

APPENDIX D A-12

In January, 1984, Millan went to a
Fashion shareholder meeting with proxies
to vote the Williams’ 30,000 shares and
Mrs. Steinbaugh's 15,000 shares. He
became Chairman and President on that
date. He then purchased Williams'
30,000 shares in exchange for a $100,000
promissory note. Millan did not pur-
chase Mrs. Steinbaugh's 15,000 shares at
this time because, he alleges, he
refused to participate in any scheme to
defraud the bankruptcy court.

In July, 1984, Bennett and Millan
were separated. A special Board meeting
was called for July 25, 1984. On that
day, Millan met with Bennett and
Steinbaugh and, in what was allegedly a
last ditch effort to save his marriage,
executed a $50,000 promissory note for
the 15,000 shares. The note was made
payable to both Bennett and Mrs.
Steinbaugh, although it appears that

APPENDIX D A-13

Mrs. Steinbaugh was still the owner of

record of the shares at the time.
Despite this move, Millan was voted out
of office at the shareholder meeting
that evening.

He never made any payments on the
$50,000 note, and never received the
15,000 shares. Millan also suspended
payment on his $100,000 promissory note
to the Williams, after making payments
totalling $17,000.

In late September, 1984, Mrs.
Steinbaugh filed a Chapter 7 bankruptcy
petition. Millan alleges that she
failed to list as assets either the
Fashion shares or the $50,000 promissory
note. The petition was withdrawn in
January, 1985; according to Millan, the
withdrawal was a result of his threats
to reveal fraud to the bankruptcy court.

Mrs. Steinbaugh and Bennett deny
any attempt to defraud, claiming that

APPENDIX D A-14

ee

Mrs. Steinbaugh did not in fact own
either the shares or the note given as
consideration of them. They allege that
Bennett had agreed some time earlier to
buy the shares from her mother for
$25,000, unless a better deal came
along.

Millan's offer was a better deal,
but since he never performed, ownership
reverted back to Bennett, not to her
mother.

Some support for this story is
found in the fact that, at the July 25
shareholder meeting, Millan himself
filled out and back-dated a bland stock
certificate to reflect Marsha Bennett's
ownership of 15,000 shares of Fashion
stock. On the other hand, as Millan
notes, there is no written record of

such an agreement between Bennett and

Mrs. Steinbaugh. Further, Murray
Gardner, then-President of the
APPENDIX D A-15

—

DEFUNCT CORPORATION AND CREATED]
A NEW CALIFORNIA CORPORATION ]
CALLED FASHION SPECIALTIES INC. ]
THE CALIFORNIA SECRETARY OF ]
STATE DOES NOT LIST ANY OFFICER]
NAMES AS YET, HOWEVER THE AGENT]
FOR SERVICE IS ONE NICOLAS ]
SANTANGELO AT 1278 GLENNEYRE ]
LAGUNA BEACH, CALIFORNIA. ]
THE ADDRESS ABOVE IS ALSO THE
ADDRESS FOR MICHAEL JESSICK J
FASHION SPECIALTIES WAS INCORP-]
ORATED ON (AUGUST 26, 1988). J

]

(J

AAA Mmmm me rss srs oe oe Le | oe De | oe Pon Lan 1 eee eee Lee Lee oe ee ee ee ee ee

VIOLATIONS OF RICO TITLE 18 USC 1962
RICO PREDICATE ACTS

VIOLATION RICO 1962 (d)

VIOLATION OF TITLE 11 U.S.C.

VIOLATION OF SECURITIES LAWS

AND THE STATE OF CALIFORNIA
THE REPERCUSSIONS FROM THE
FRAUDULENT FILING OF THE 1099
TAX FORM BY THESE DEFENDANTS
ARE CONTINUING TO THIS DAY. ON
AUGUST 14,1988, MILLAN WAS
NOTIFIED BY HIS EMPLOYER THAT
THE STATE OF CALIFORNIA
FRANCHISE TAX BOARD HAD PLACED
A LIEN ON MILLAN‘S WAGES FOR
$4,196.49 BASED ON THE FILING
OF THE FASHION EMBROIDERY 1099
TAX FORM FOR THE TAX YEAR 1984.
(AUGUST 14, 1988)

ry ey ee eee) ey ee ee ee ee ee eee

C]

APPENDIX G A-55

i

me ce Doe De De ee De De De ee 0 ce De ee 0 ee ee | ee 9 ee Fe Foe | ra rr Fn F Fe FF Se

VIOLATIONS OF RICO TITLE 18 USC 1962
RICO PREDICATE ACTS

VIOLATION RICO 1962 (d)

VIOLATION OF TITLE 11 U.S.C.

VIOLATION OF SECURITIES LAWS

VIOLATION OF TITLE 18 USC 1343

VIOLATION OF TITLE 18 USC 1341

C]

SCHEME 5: DEFRAUD THE U.S.
INTERNAL REVENUE SERVICE
AND MILLAN BY NOW TAKING THE
ASSETS OF FASHION EMBROIDERY
INC., THAT WERE FRAUDULENTLY
OBTAINED THROUGH THE I.R.S.
SALE BY FASHION GROUP LTD., AND]
NOW TRANSFERRING THOSE ASSETS TO]
AN ENTITY CALLED FASHION ]
SPECIALTIES LTD. OWNED BY THESE]
SAME DEFENDANTS AND CO-CONSPIR-]
ATORS. MILLAN LEARNED OF THIS ]
FURTHER ASSET TRANSFER ON ]
SEPTEMBER 23, 1988. IT IS ]
CLEAR THAT THESE DEFENDANTS ]
]
]
]
]

ee eee ee

ARE ATTEMPTING TO MAKE THEM-
SELVES JUDGEMENT PROOF.
(SEPTEMBER 23, 1988)

APPENDIX G A-56

i td hd kk

COURT DOCKET #62 FACING PAGE:

CIVIL ACTION NO. 87-2283 WIR (TX)

PLAINTIFF RICHARD MILLAN'S
NOTICE OF MOTION AND MOTION TO
RECUSE THE HON. WILLIAM J. REA
JUDGE OF THE UNITED STATES
DISTRICT COURT

AFFIDAVIT OF PREJUDICE
CERTIFICATE OF GOOD FAITH
FILED CONCURRENTLY WITH NOTICE
OF MOTION AND MOTION TO
DISQUALIFY AND RECUSE

ATTORNEY STEVEN LUBELL
DECLARATION OF RICHARD MILLAN

STATEMENT OF FACTS AND
POINTS AND AUTHORITIES

DATE: July 11, 1988

TIME: 10:00 A.M.

PLACE: COURTROOM 10

JUDGE: HON. WILLIAM J. REA

CONCURRENT MOTIONS

APPENDIX H

A-57

EXCERPTS FROM PROFESSOR BREWERS
“Mandamus Power,” Buffalo Law Review,
Vol. 31, 1982 at pages 68 through 70:
“One group that is not hesitant to file
mandamus petitions, on grounds of delay
or otherwise, is pro se litigants. Pro
se petitions represented about one-half
of all of those that were filed during
these three years. There are probably
various reasons to explain this. Such
litigants undoubtedly have less stake in
maintaining + favorable long-term
relationship with a judge than does an
attorney, so perhaps they have less
inhibition about using a procedure that
might offend the district judge.
Secondly, such litigants are generally
considered extremely litigious and
willing to file numerous legal papers.
Moreover, they are probably less
familiar with normal modes of procedure
and consequently would not view an
interlocutory petition to the appellate

APPENDIX I A-58

court as particularly extraordinary.
Finally, most of these pro se petitions
are filed by prisoners who have
initiated habeas corpus or 28 U.S.C. §
2255 petitions, or civil rights actions
under 42 U.S.C. § 1983. Often, these
end up being filed in great numbers in a
few districts, thereby causing delay and
leading to mandamus petitions. This
delay is undoubtedly exacerbated by some
degree of dislike for this barrage on
the part of the judges in those
districts.

In any event, the most important
point is not the precise reason for this
large number of pro se petitions, but
the fact that it exists. Removing these
pro se petitions gives a better picture
of the number of mandamus petitions
£ ATTORNEY STEVEN LUBELL HAS
CLAIMED THAT TO GIVE PLAINTIFF THE TRUE
MARRIED NAME OF DEFENDANT MARSHA BENNETT
IS AN INVASION OF PRIVACY. THE TRUE
FACTS ARE THAT ATTORNEY STEVEN LUBELL
HAS BEEN HIDING UDAY RAJ SAWHNEY AND
DOCUMENTS FROM PLAINTIFF AND ALLOWING
DEFENDANT MARSHA BENNETT TO COMMIT
PERJURY IN THESE COURT PROCEEDING. WHEN
PLAINTIFF LEARNED THE TRUE MARRIED NAME
OF DEFENDANT MARSHA BENNETT, THE NATURE
OF THE MISCONDUCT BY ATTORNEY STEVEN

LUBELL WAS MADE VERY CLEAR.

at > F Plaintiff has been trying for
months to obtain the financial records,
stock registers, books of accounts,
customer files and lists, computer print
outs of defendant FASHION EMBROIDERY
INC. Defendant MARSHA BENNETT IS THE

APPENDIX BB A-151

CORPORATE SECRETARY AND TREASURER OF
defendant FASHION EMBROIDERY INC., in
March of 1986, Attorney Karen Donahoe of
the Law firm of Mayer and Glassman
subpoenaed the records and stock regis-
ters from defendant FASHION EMBROIDERY
INC., for use in the divorce trial of
MILLAN V. MILLAN the above records were
turned over to MARSHA BENNETT AND HER
ATTORNEYS BY DEFENDANT MURRAY GARDNER
AND NEVER RETURNED TO THE CORPORATION BY
DEFENDANT MARSHA BENNETT. DEFENDANT
MARSHA BENNETT DENIES HAVING THE

RECORDS.

"a4. Plaintiff learned on March 4,
1988 that UDAY RAJ SAWHNEY, the current
husband of defendant MARSHA BENNETT was
the certified public accountant of
defendant FASHION EMBROIDERY INC. U.R.
SAWHNEY NOT ONLY AUDITED THE BOOKS AND
RECORDS OF DEFENDANT FASHION EMBROIDERY,

APPENDIX BB A-152

BUT HE ALSO WAS INSTRUMENTAL IN REPORT-
ING THE FINANCIAL CONDITION OF DEFENDANT
FASHION EMBROIDERY INC. TO FINANCIAL
INSTITUTIONS AND CREDIT REPORTING
AGENCIES SUCH AS DUN AND BRADSTREET
CORPORATION. MR. SAWHNEY WAS ALSO
INSTRUMENTAL IN THE FRAUD INVOLVING THE
OWNERSHIP OF STOCK IN DEFENDANT FASHION
EMBROIDERY INC. PLAINTIFF BY THIS
MOTION INTENDS ALSO TO GIVE NOTICE TO
MR. U.R. SAWHNEY THAT A SUBPOENA FOR ALL
RECORDS, FILES, CORRESPONDENCE, FINAN-
CIAL BOOKS, JOURNALS, STOCK LEDGERS,
COMPUTER PRINTOUTS AND ANY BUSINESS
DEALINGS IN WHATEVER FORM BETWEEN
FASHION EMBROIDERY INC., OR ANY PERSON

ASSOCIATED WITH FASHION EMBROIDERY INC.,

AND MR. UDAY RAJ SAWHNEY WILL BE ISSUED.
DEFENDANT MARSHA BENNETT'S DENIAL OF ANY
KNOWLEDGE OF ANY PERSON WHO HAD RECORDS
OF FASHION EMBROIDERY INC., WAS A CLEAR
ATTEMPT BY DEFENDANT MARSHA BENNETT AND

APPENDIX BB A-153

HER ATTORNEY STEVEN LUBELL TO HIDE THE

IDENTITY AND PARTICIPATION OF HER

HUSBAND UDAY RAJ SAWHNEY.

[H}) “35. Counsel Steven Lubell on
November 12, 1987 was put on notice that
Plaintiff would amend his complaint to
add the married name of MARSHA BENNETT
and include the following persons and
entities; DOUGLAS MARTIN, MARTIN TANK
MFG. INC. and CERTIFIED TANK MANUFACTUR-
ING INC. Ever since that day Mr Lubell
has obstructed discovery and the pro-

ceedings of this Court by the following.

+i *® 1. Directing this Court's
attention to INTERROGATORIES PROPOUNDED
BY PLAINTIFF RICHARD MILLAN TO DEFENDANT
MARSHA BENNETT, SET 1 NUMBERS 1 TO 30,
lodged with this Court.

At page 3 line 10.

APPENDIX BB A-154

INTERROGATORY NO. 7

Have you ever been named as a
defendant in a civil action in either
State or Federal Courts? If so, for
each action state:

(a) the city and state where
the action was filed;

(b) the Court and case number;

(c) the names and ADDRESSES of
each plaintiff;

(d) the nature of the com-
plaint;

(e) the disposition or

judgment of the action.
RESPONSE TO INTERROGATORY NO. 7 BY
MARSHA BENNETT.

(a) Answering party is at-
tempting to obtain information
requested. In the interest of
discovery, answering defendant answers
with the known information. Los
Angeles, California.

APPENDIX BB A-155

(b) Los Angeles Superior Court

(c) Haffner v. Bennett
(d) Business dispute

(e) Case dismissed

we iP Directing this Courts atten-
tion to the DEPOSITION OF MARSHA BENNETT
ON TUESDAY, FEBRUARY 23, 1988 AND LODGED
WITH THIS COURT.

At page 10 lines 11 through 23.

By Mr. Millan

Q. (READING: )
"NO. 20. MARSHA BENNETT

IS REQUESTED TO PRODUCE ANY AND ALL
NAMES OF CASES IN WHICH SHE WAS EITHER A
PLAINTIFF OR DEFENDANT IN EITHER STATE
OR FEDERAL COURT IN WHATEVER
JURISDICTION SUCH JURISDICTION SUCH CASE
WAS FILED.”

Mr Lubell: We have answered that
guestion in one of your interrogatory

requests. It‘s already been answered.

APPENDIX BB A-156

U WER 0 OV AR

AS FOLLOWS.

"38. COMMONWEALTH FINANCIAL V.
COLLEEN STEINBAUGH, MARSHA BENNETT AND
RICHARD MILLAN--LOS ANGELES SUPERIOR
COURT, CENTRAL DISTRICT C473743.
ACTION BROUGHT AGAINST COLLEEN
STEINBAUGH AND MARSHA BENNETT FOR
DESTROYING AND GUTTING A HOME
REPOSSESSED BY COMMONWEALTH FINANCIAL
FROM RICHARD AND COLLEEN STEINBAUGH
BEFORE RICHARD MILLAN HAD EVER MET
MARSHA BENNETT AND COLLEEN STEINBAUGH.
THIS CASE FOR BAD FAITH WASTE,
CONSPIRACY TO CAUSE BAD FAITH WASTE, AND
CONVERSION OF PERSONAL PROPERTY STILL
PENDING IN SUPERIOR COURT.

2. HARMIER V. DOUGLAS MARTIN,
MARSHA BENNETT AND CERTIFIED TANK MFG.

3.-MARSHA BENNETT SAWHNEY V.
MAYER & GLASSMAN LAW CORPORATION. LOS

APPENDIX BB A-157

ANGELES SUPERIOR COURT C658214. THIS
CASE FOR LEGAL MALPRACTICE WAS FILED BY
MARSHA BENNETT IN AUGUST, 1987. HER
ATTORNEY OF RECORD WAS STEVEN LUBELL.
THE EXISTENCE OF THIS CASE RECORD WAS
WITHHELD FROM PLAINTIFF IN BOTH THE
INTERROGATORIES OF MARSHA BENNETT AND
THE SUBPOENA FOR DOCUMENTS AT DEPOSITION
SERVED ON MARSHA BENNETT ON FEBRUARY 6&8,
1988. THE WITHHOLDING OF THIS CASE FROM
PLAINTIFF WAS DONE INTENTIONALLY BY
ATTORNEY STEVEN LUBELL TO PREVENT
PLAINTIFF FROM LEARNING THE TRUE MARRIED

NAME OF DEFENDANT MARSHA BENNETT.

€) ie | P Directing this Court's
attention to INTERROGATORIES PROPOUNDED
BY PLAINTIFF RICHARD MILLAN TO DEFENDANT
MARSHA BENNETT, SET 1 NUMBERS 1 TO 30,
lodged with this Court.

At page 3 line 10.

INTERROGATORY NO. 27.

APPENDIX BB A-158

Within the past fifteen years
have you owned any real estate with
Douglas Martin? If so, for each real
estate parcel state:

(a) the location of the real
estate records;

(b) the ownership interest in
each real estate parcel.

(c) the address of each parcel
of real estate;

(d) the date each was pur-
chased by you;

(e) the date each was sold by

you,

(e) the type of deed transfer;
(£) the city and county of
each real estate parcel.
ANSWER TO INTERROGATORY 27 BY
MARSHA BENNETT.

27. ANSWER: NO

APPENDIX BB A-159

[Kk] “PLAINTIFF DIRECTS THIS COURTS

ATTENTION TO THE FOLLOWING EXHIBITS:

40. 1. LOS ANGELES COUNTY DEED OF
TRUST DOCUMENT NO. 81-381907 (EXHIBIT 6)

THIS DEED OF TRUST READS IN
PART: "For value

Received, the undersigned
hereby grants, assigns and transfers to
DOUG MARTIN, An Unmarried Man and

MARSHA BENNETT, A Single Women,
as Joint Tenants all beneficial interest
under that certain Deed of Trust dated
April 13, 1981 executed by VICTOR M. MC
BETH, A Single Man and JANET L. BAILEY,
A SINGLE WOMAN.....

2

{[M]) 7. Defendant Bennett and her
counsel Steven Lubell misrepresented
material matters that led to the
prejudicial denial of Millan's motion to
amend the complaint in deposition, and
interrogatories and Court, said action
completely prejudiced Millan's case and
resulted in the order denying Millan
leave to amend complaint, continue

discovery and pretrial conference dates.

9. The original state action in 1984
came aS a cross-complaint to an action
filed by Marsha Bennett against Millan.
The basic causes of action were related

to Breach of Contract, constructive

>see: C.R. 33: paragraphs 24

through 27 and paragraphs 28 through 53.

APPENDIX BB A-171

trust, injunction, etc. In July of
1985, Millan was seriously injured and
required hospitalization for a few
months. On July 17, 1985 the Honorable
Robert H. O'Brien granted Millan a 30
day leave to amend his second amended
cross-complaint. [Exhibit 3] On July
26, 1985, Millan was involved in an
industrial accident which required an
operation and hospitalization for
several months. In August of 1986
Millan was given a further extension to
file the amended cross-complaint.
Millan's injuries prevented him from

filing the amended cross-complaint.

10. MR. LUBELL IS ALSO COUNSEL FOR
BENNETT IN THE STATE CASE. HE WAS WELL
AWARE OF WHAT HAD TRANSPIRED IN THE
STATE CASE. THE FOLLOWING IS HOW MR.
LUBELL MISREPRESENTED THOSE FACTS TO THE

JUDGE REA IN U.S. DISTRICT COURT:

APPENDIX BB A-172
—————————————EEOeeee—O—OEOEOeeeeeeeeeeeeEeEeEeEeEeEE———EE—EE

11. Mr. Lubell stated in his opposition
to amend complaint "After two State
Court Demurrers and two Amended com-
plaints Plaintiff, Millan was left with
a cross-complaint alleging four (4)
causes of action against defendant,
Bennett and the ten (10) additional

defendants

12. THIS WAS TOTALLY FALSE, MILLAN WAS
NOT THE PLAINTIFF IN THIS CASE, BENNETT
WAS, AND THE ONLY PERSONS LEFT IN THE
CASE WERE BENNETT, C. STEINBAUGH AND
MARTIN. THE OTHER DEFENDANTS WERE OUT
OF THE CASE. THE FOLLOWING PROPOSED
DEFENDANTS DID NOT APPEAR IN ANY PRIOR
CASE: UDAY RAJ SAWHNEY, MICHAEL JESSICK,
DEBRA K. JESSICK, FASHION GROUP LTD.AND

ANGELTOWN INC.[Exhibit 3]

a3. Mr-.. Lubell stated to Judge Rea

the following: "The amended complaint to

APPENDIX BB A-173

this action includes those names and
many of the causes of actions that on a
demurrer were denied with the exception
of a breach of contract, a constructive
trust specific performance and
declaratory relief and all we are doing
is rehash. It's already been decided in
the state court.

The Court: ™ You mean there is a
demurrer sustained without leave to
amend?

Mr. Lubell: “Correct”

Mr. Millan: “No it's not correct”

Mr. Lubell: "Demurrer with 30 days
to amend and the 30 days went beyond----
cooee " [Exhibit 3].

The Court:"-------- but what about
the pendent claims for conversion and
intentional infliction of emotional
distress?

Why should they be addressed in
this Rico case?"

APPENDIX BB A-174

Mr. Lubell: "They were dismissed
in the state court action on the first
‘demurrer and second demurrer. I don't
believe they are proper here if they
have already been dismissed based upon
the same set of facts in the state court
action."

The Court: "I don't really know
why they were dismissed. I asked you:
Were they dismissed or a demurrer
sustained?

Mr. Lubell: "Sustained"

The Court: "But you told me that
it was sustained with leave to amend.
Do you know why it was never amended?"

Mr. Lubell: "No. . Without being
able to produce evidence in a summary
judgment motion or without atrial, it
is difficult to explain it in this type

of a hearing.”

APPENDIX BB - A-175

14. THE TRUE FACTS ARE THAT MR.
LUBELL REPRESENTS BENNETT IN THE STATE
CASE, HAS ALL OF MILLAN'S MEDICAL FILES
AND ALL OF THE STATE CASE RECORDS. Mr.
Lubell is well aware that there are only
three people remaining in the state case
and that none of additional counts
Millan is seeking to amend into his
complaint have anything to do with the

state case.

(N] 15. THE COURT STATED THAT THE
AMENDMENT WAS UNTIMELY SINCE MILLAN KNEW
OR SHOULD HAVE KNOWN OF THESE CLAIMS AND
PARTIES AT THE TIME THE TIME HE FILED

THE ACTION."

16. Mr. Lubell misrepresented the
following facts to the Court:

The Court: "Well, how long do you
believe that he's known of these persons
other that the new name of his ex-wife?

APPENDIX BB A-176

Mr. Lubell: "Since May 29, 1985
when the second amended complaint was

filed.”

17. THE TRUE FACTS ARE THAT THE
PROPOSED AMENDED COMPLAINT WAS FOR
EVENTS THAT HAPPENED FROM 1985-1987,
EVENTS THAT MILLAN HAD NO KNOWLEDGE OF
UNTIL HE RECEIVED DOCUMENTS FROM DEFEN-

DANT MURRAY GARDNER IN FEBRUARY OF 1988.

18. Millan had no knowledge that
Bennett was even married until July
1987. There is no way that Millan could
have known of her new husband Uday Raj
Sawhney in May of 1985 since they were
married sometime after March of 1986.
There is no way that Millan could have
known of the slander by Bennett in May
of 1985 since it was not done until
November of 1985 and remained unknown to

Millan until the documents were sent to

APPENDIX BB A-177

him by STEVEN Lubell in November of

1987. The transactions between Martin
and Bennett and Lubell were not until

September of 1987.

[0] 19. LUBELL CONCEALED THE TRUE NAME
OF BENNETT DURING THESE PROCEEDINGS FROM
MILLAN BY CLAIMING FIRST AMENDMENT
PRIVILEGE "INVASION OF PRIVACY" IN ORDER
TO HIDE THE COMPLICITY OF HER NEW
HUSBAND UDAY RAJ SAWHNEY, THE ACCOUNTANT
FOR FASHION EMBROIDERY INC., A COMPANY

ONE THIRD OWNED BY MILLAN.

[P] 20. Defendant Bennett and her
counsel Steven Lubell misrepresented the
record in the divorce proceedings of
Millan vs. Millan (Bennett) and the
state court action of Bennett vs. Millan
and this prejudicial testimony was used
by the District Court to base his
decision to deny Millan's motion for

APPENDIX BB A-178

leave to amend, continue the discovery

and pretrial conference dates.

21. At Court: "Mr. Lubell: There
is a final order in the dissolution
action saying that the parties shouldn't
annoy or harass each other and it seems
that this federal proceeding is just a
way of circumventing the court order
that they shouldn't have contact with
each other. [Exhibit 1 page 39
paragraph L] aisrepresentaticn is
consistently being used by Mr. Lubell to
portray Millan in a false light before

the court.

22. THE TRUE FACTS ARE AS FOLLOWS:
Bennett at her specific instruction
entered upon the settlement agreement in
Millan v. Millan a requirement that the
litigation between the two parties
should not be a part of the settlement

APPENDIX BB A-179

agreement. Mr. Lubell is the counsel
for Bennett in the state court action
and he is well aware of the following.
"Pursuant to oral stipulation of the
parties, Petitioner, Marsha Bennett, and
Respondent, Richard Millan, on March 27,
11986 entered into on that same date and
time in Department 67 of the above-enti-
tled Court, as reflected and set forth
in the reporter's transcripts of
proceedings, It is Further Ordered: (1)
The Court Finds that Petitioner now owns
certain assets as her sole and separate
property, that Respondent disclaims and
waives all right, title and interest in
these assets, and therefore confirms
them to Petitioner. These assets are as
follows: "------- 1. Any and all recovery
awarded Petitioner Marsha Bennett in Los

Angeles Superior Case No. C525013.

APPENDIX BB A-180

There was no such requirement advanced
by Millan in his side of the divorce
settlement. Bennett clearly intended to
continue the litigation between the

parties.

[Q] 22. Defendant © Bennett and her
counsel Steven Lubell concealed parties,
documents, names and events from Millan
in deposition, subpoenas to produce
documents, interrogatories, that preju-
diced Millan's attempt to discover the
needed evidence and facts in this
action. Said misconduct resulted in
delaying the filing of the motion to
amend, continue the discovery and

pretrial conference dates.

23. On February 8, 1988, a Notice
of Deposition and Subpoena for Documents

Was issued to defendant Bennett.

APPENDIX BB A-181

24. On February 23, 1988 at the
deposition of defendant Bennett, the
subpoenaed documents were not produced
and Bennett was cited by the Court
Reporter. Defendant Bennett perjured
herself about the following material
matters and concealed documents and
concealed the direct involvement of
attorney Steven Lubell in the affairs of
Certified Tank. Mr. Lubell knew she was
responding untruthfully and concealing
documents and Mr. Lubell knew that
Bennett was concealing his active
involvement in the business affairs of
Certified Tank, and in the business
affairs of Douglas Martin. Mr. Lubell
allowed his client to continue to

respond untruthfully

Deposition of Marsha Bennett
Q. Did you bring any and all
records showing any ownership interest

APPENDIX BB A-182

in Certified Tank Manufacturing, Inc, by
Douglas Martin for any period of time
Since its incorporation to the present
day?

A. No. [MARSHA BENNETT]

Q. Are there any such
records?

A. Mr. Martin's records are

his own records.

Deposition of Marsha Bennett

Q. “Did you bring any and a}l
financial records of any and all finan-
cial transactions between Marsha Bennett
and Douglas Martin for the period of
1980 through 1988?"

A. (Bennett) " I do not have any
financial records of financial transac-

tions between myself and Mr. Martin.”

Deposition 6f Marsha Bennett

APPENDIX BB A-183

Q. “Miss Bennett, is Anthony
Carrasco, Senior the President of
Certified Tank Manufacturing Incorporat-
ed?"

A.(Bennett) "I have no knowl-
edge of the workings of Certified Tank.
I sold the company. It is their company
to do with as they please: run it,
operate it, and conduct themselves as

they please.

24. THE CONCEALMENT OF THE RECORDS
SUBPOENAED OF DOUGLAS MARTIN AND CERTI-
FIED TANK MFG. INC., AND THE DISCLAIMER
OF KNOWLEDGE OF THE OPERATIONS OF
CERTIFIED TANK MFG. BY BENNETT IN THE
PRESENCE OF ATTORNEY LUBELL CAN ONLY BE
CLASSIFIED A COMPLETE FALSEHOOD AND
PERJURY. MILLAN DIRECTS THIS COURTS
ATTENTION TO THE DOCUMENTS AT [EXHIBIT
4]. Lubell filed this document in the
Los Angeles County Recorders office on

APPENDIX BB A-184

September 10, 1987, for Bennett in favor
of ‘Douglas Martin. Directing the
Court's attention to [Exhibit 5]. This
document was filed by Lubell on Septem-
ber 10, 1987 with the Los Angeles County
Recorder for Bennett in favor of Douglas
Martin. Further directing this Court's
attention to [Exhibit 6]. This document
filed by Lubell at the Los Angeles
County Recorders office is a notice of
sale of the property that Certified Tank
Mfg. Inc., was located on, again for
Bennett in favor of Douglas Martin.
This sale was to be held on January 15,
1988 at 1234 Sixth Street., City of
Santa Monica. 1234 Sixth Street is the

address of Attorney Steven Lubell.
([R] 25. Deposition of Marsha Bennett
By Mr. Millan: Q. "Do you know of

any persons that have records of Fashion

APPENDIX BB A-185

Embroidery, Incorporated, other that

Murray Gardner, Bonnie Gardner, Fashion
Embroidery, Inc., or Richard Millan?

Answer(Bennett) No.

26. THE TRUE FACTS ARE THAT
DEFENDANT MARSHA BENNETT AND ATTORNEY
STEVEN LUBELL CONCEALED THE FACT THAT
MARSHA BENNETT'S HUSBAND UDAY RAJ
SAWHNEY WAS THE ACCOUNTANT FOR FASHION
EMBROIDERY INCORPORATED AND HE WAS
RESPONSIBLE FOR THE FINANCIAL REPORTS
AND RECORDS OF FASHION EMBROIDERY INC.
THE CONCEALMENT OF AND THE PERJURY IN
THE ABOVE PARAGRAPH OF MATERIAL FACTS
WAS INSTRUMENTAL IN PREVENTING PLAINTIFF
FROM COMPLETING HIS DISCOVERY IN THIS

ACTION.

APPENDIX BB A-186

COURT RECORD 81 PAGES 2 THROUGH 22
DIRECT REBUTTAL TO THE TESTIMONY OF
MARSHA BENNETT AND THE LIST OF PREDICATE
RICO ACTS IN THIS CASE

STATEMENT OF FACTS

—~ Defendants in this action in their
reply memorandum to opposition to motion
for summary judgment have demanded that
plaintiff produce affidavits to support
his claims. Plaintiff set forth his
Declaration in his Motion for Summary
Judgement and each and every statement
of fact was with direct knowledge of the
subject matter therein.

However, in order to put
defendants’ wild pleadings to rest and
to put a finish to some of the
implausible defenses that Mr. Luhell in
his wisdom has put forth, Plaintiff
places before this Court the
Declarations of Murray R. Gardner,
Bonnie Gardner, and Paul Schmidt in
support of Plaintiff's Opposition to

APPENDIX CC A-187

Defendants’ Motion For Summary

Judgement.

Re The following is a direct rebuttal
“E6--the testimony given by Defendant
Marsha Bennett ("Bennett") in her
declaration in support of her motion for
summary judgment against plaintiff
Richard Millan. Plaintiff was able to
secure the following declarations from
defendants Murray Gardner and Bonnie
Gardner on September 23, 1988 and both
declarations are attached herewith as

Exhibits 1 and 2.

2. Defendants Murray Gardner ("M.
Gardner") and Bonnie Gardner ‘ee =
Gardner") were in the original group of
incorporators of Defendant Fashion
Embroidery Inc.,("Fashion"). They have
been throughout the entire time since
incorporation to the present day a part

APPENDIX CC A-188

NN nae ia iii a

of every event in the life of Fashion.
M. Gardner has served as an officer,
President, Vice President, Secretary and
on the Board of Directors of Fashion.
He has been a shareholder since the
incorporation and better than any other
person knows each and every event that
has transpired within Fashion and is
highly competent to testify at this

trial about tthe business affairs of

Fashion.
2. Defendant Bonnie Gardner is the
wife of M. Gardner and also a

Shareholder of Fashion. B. Gardner has
worked at Fashion in many capacities
Since its incorporation, and was. privy
to every meeting, decision and event in
Fashion corporate life. B. Gardner
participated in every meeting and
discussion involving Marsha Bennett and
Fashion business subsequent to the

APPENDIX CC A-189

departure of Plaintiff Richard Millan in
July of 1984. See declaration of Murray
Gardner page 2 paragraph 2.

[(2)] " I was president of Fashion
Embroidery, Inc. after July 31, 1984
until the corporation's ultimate demise.

Plaintiff will take excerpts from
the Declaration of Marsha Bennett and
immediately follow with paragraphs from
the Declarations of Murray Gardner and
Bonnie Gardner.

Quoting excerpts from Declaration
of Marsha Bennett ("Declare M.B.") 1

lines 16 through 19.

4. "The initial Directors of the
Corporation were Theda Williams;
Matthias L. Williams; Murray Gardner;
Bonnie Gardner; Richard W. Steinbaugh;

Colleen Steinbaugh."

APPENDIX CC A-190

EEE

5. "Colleen Steinbaugh is my natural
mother. Richard W. Steinbaugh was my
step-father. In or around May of 1983
my mother, Colleen Steinbaugh stated to
me that she was contemplating a
dissolution of her marriage to Richard
W. Steinbaugh. My mother figured that
half of the community estate belonged to
her. On that basis I entered into an
agreement with my mother, Colleen
Steinbaugh in which I would give her
$25,000.00 in return for her 15,000
shares of stock in the corporation. I
made this agreement with my mother with
the full understanding that there had
not been a final judgment, nor a_ final
settlement of the community property in
4 dissolution of their marriage.
[Declare. M.B. Page 2 lines 3 through
14].

Declaration of Murray Gardner page

3 para. 11 and 12.

APPENDIX CC A-191

[(11)]. "Marsha Bennett did not
purchase Colleen Steinbaugh's shares of
of stock in Fashion Embroidery, Inc. in
May of 1983 or at any time thereafter."

[(12)]. “Colleen Steinbaugh owned
15,000 shares of Fashion Embroidery
Inc., stock on January 11, 1984.

Declaration of Bonnie Gardner page
3 para. 7 and 8.

((7)]. “Marsha Bennett did not
purchase Colleen Steinbaugh's shares of
of stock in Fashion Embroidery, Inc. in
May of 1983 or at any time thereafter.”

[(8)]. “Colleen Steinbaugh owned
15,000 shares of Fashion Embroidery

Inc., stock on January 11, 1984."

6. [(9)]. ae never used any
interstate telephone calls to discuss
any part of any agreement with Richard
Millan with respect to the 15,000 shares
of stock. I never used the United

APPENDIX CC A-192

States mail to communicate any agreement
or offer or any other communication with
respect to the alleged sale and/or
transfer of the 15,000 shares of stock.
[Declare M.B. page 6 para. 9]

Declaration of Murray Gardner at
page 3 para. 13,

"[(13)] “Marsha Bennett and I. sent
Richard Millan a Western Union telegram
regarding the special director
shareholders meeting scheduled on July

25, 1984. Also see Exhibit 3.

vw "On July 25, 1984, I called along
with the other Directors, pursuant to
the By-laws of the Corporation, a
special meeting of the Board of
Directors at which time I voted to
remove Richard Millan as the Director of
the Corporation. [Declare M.B. page 4
lines 4-8 ].-

APPENDIX CC A-193

Declaration of Murray Gardner at
page 3 para. 13,

"[(13)] “Marsha Bennett and I. sent
Richard Millan a Western Union telegram
regarding the special director
shareholders meeting scheduled on July

25, 1984. Also see Exhibit 3.

8. On July 31, 1984, I resigned as’ the
Director of the Corporation. [Declare
M.B. page 4 lines 8-9].

Declaration of Murray Gardnerat
page 2 paragraphs 3, 4, & 5.

[(3)]. “Marsha Bennett was an
officer of Fashion Embroidery Inc.,
after July 31, 1984. (emphasis mine).

[(40]. “Marsha Bennett did not
resign as a director of Fashion
Embroidery, Inc., on July 31, 1984 or at
any other time thereafter.” (Emphasis

mine)

APPENDIX CC A-194

[(5)]. "Marsha Bennett did not

resign as secretary/treasurer of Fashion
Embroidery, Inc. on July 31, 1984 or at
any other time thereafter.

Declaration of Bonnie Gardnerat
page 2 paragraphs 3, 4, & 5.

€b 5% F "Marsha Bennett was an
officer of Fashion Embroidery inc.,

after July 31, 1984. (emphasis mine).

[(40]. "Marsha Bennett did not

resign as 6 director of Fashion
Embroidery, Inc., on July 31, 1984 or at
any other time thereafter." (emphasis
mine)

[(5)]. "Marsha Bennett did not

resign as secretary/treasurer of Fashion
Embroidery, Inc. on July 31, 1984 or at

any other time thereafter.

9. Richard Millan filled out the
certificate in his own hand, and he

himself back dated the certificate to

APPENDIX CC A-195

May 13, 1983, which of course was the
date of the transfer between my mother
and myself. It is difficult for me to
understand how Richard Millan can allege
that my mother hid her alleged ownership
of the 15,000 shares from the bankruptcy
court, when Richard Millan himself
acknowledged by the execution of this
share certificate that the stock had
previously been transferred to me over a
year before my mother filed her
bankruptcy petition. [Declare M.B. page
5-6 lines 28, 1-10.]

See Plaintiffs’ Response to
Defendants Marsha Bennett and Colleen S.
Steinbaugh's Opposition to Motion to
Recuse Judge William J. Rea and to
Disqualify Attorney Steven Lubell, pages
15 through 18, at paragraphs 30 through
36 filed with this court on July 5,

1988.

APPENDIX CC A-196

See Declaration of Murray Gardner
page 3 para. 1l and 12.

[(11)]. “Marsha Bennett did not
purchase Colleen Steinbaugh's shares of
of stock in Fashion Embroidery, Inc. in
May of 1983 or at any time thereafter."

[(12)]. “colleen Steinbaugh owned
15,000 shares of Fashion Embroidery
Inc., stock on January 1l, 1984.

See Declaration of Bonnie Gardner
page 3 para. 7 and 8.

((7)]. “Marsha Bennett did not
purchase Colleen Steinbaugh's shares of
of stock in Fashion Embroidery, Inc. in
May of 1983 or at any time thereafter."

[(8)]. “colleen Steinbaugh owned
15,000 shares of Fashion Embroidery

Inc., stock on January ll, 1984.

10. “The allegations of the pleadings
State that -I knew and assisted my

mother, Colleen Steinbaugh in defrauding

APPENDIX CC A-197

the United States Bankruptcy Court in
that allegedly my mother did not list
her 15,000 shares of stock in a
bankruptcy petition that she filed with
the Court on a date that I believe was
September 10, 1984."

See Declaration of Murray Gardner
page 3 para. 1l and 12.

[(11)]. “Marsha Bennett did not
purchase Colleen Steinbaugh's shares of
of stock in Fashion Embroidery, Inc. in
May of 1983 or at any time thereafter.”

[(12)]. “Colleen Steinbaugh owned
15,000 shares of Fashion Embroidery
Inc., stock on January ll, 1984.

See Declaration of Bonnie Gardner
page 3 para. 7 and 8.

[(7)]. “Marsha Bennett did not
purchase Colleen Steinbaugh's shares of
of stock in Fashion Embroidery, Inc. in

May of 1983 or at any time thereafter."

APPENDIX CC A-198

[(8)]. “Colleen Steinbaugh owned
15,000 shares of Fashion Embroidery

Inc., stock on January ll, 1984.

ll. “As I have indicated, my mother,
Colleen Steinbaugh, in May of 1983, had
transferred her shares to me for
$25,000.00." [Declare M.B. page 7 lines
4-6.]

See Declaration of Murray Gardner
page 3 para. 1l and 12.

((11)]. “Marsha Bennett did not
purchase Colleen Steinbaugh's shares of
of stock in Fashion Embroidery, Inc. in
May of 1983 or at any time thereafter."

[(12)]. “colleen Steinbaugh owned
15,000 shares of Fashion Embroidery
Inc., stock on January 1l, 1984.

See Declaration of Murray Gardner
page 3 para. 7 and 8.

[(7)]. -“Marsha Bennett did not
purchase Colleen Steinbaugh's shares of

APPENDIX CC A-199

of stock in Fashion Embroidery, Inc. in
May of 1983 or at any time thereafter."

[(8)]. “Colleen Steinbaugh owned
15,000 shares of Fashion Embroidery

Inc., stock on January ll, 1984.

12. "The allegations of the pleadings
state that I caused and filed a
fraudulent 1099 form with the Internal
Revenue Service with respect to Richard
Millan.” [Declare M.B. page 7 lines
11-13.)

See Declaration of Murray Gardner 3
lines 14-16.

[(10)]. "Either Marsha Bennett,
Uday Raj Sawhney or both, created the
Fashion Embroidery, Inc. 1099 tax form
in regards to Richard Millan for the tax
year 1984."(Uday Raj Sawhney is
Bennett's current husband).

See Declaration of Bonnie Gardner 3

lines 14-16.

APPENDIX CC A-200

[(10)]. “Either Marsha Bennett,

Uday Raj Sawhney or both, created the
Fashion Embroidery, Inc. 1099 tax form
in regards to Richard Millan for the tax
year 1984."(Uday Raj Sawhney is

Bennett's current husband).

a3. "I never had any control over the
employees books and records during my
tenure with the Corporation." [Declare
M.B. page 7 lines 13, 14 and 13..3

See Declaration of Murray Gardner
pages 2 & 3 paragraphs 6-9:

[(6)]. " Some time after July
31, 1984, I was instructed by Marsha
Bennett to allow Uday Raj Sawhney to
perform an "audit" of all of the books
and records of Fashion Embroidery, Inc.
Pursuant to Marsha Bennett's
instruct ons, I allowed Mr. Sawhney
access to all the books and records of

Fashion Embroidery, Inc. To the best of

APPENDIX CC A-201

my recollection, Mr. Sawhney spent
approximately one week at the Fashion
Embroidery, Inc.‘s offices reviewing all
of the financial information. Mr.
Sawhney subsequently issued a financial
statement for Fashion Embroidery, Inc.
for the period ending December y >
1985."

Le aer "Following this work by
Mr. Sawhney, and the issuance of the
financial statement, I received
telephone calls from time to time from
Mr. Sawhney requesting information about
the financial status of Fashion
Embroidery, Inc. At all times, it was
my understanding that Mr. Sawhney was
seeking this information on behalf of
Marsha Bennett and as her
representative."

[(8)]. "Mr. Sawhney was also

involved in representing Fashion

APPENDIX CC A-202

Embroidery, Inc., with the Interna]

Revenue Service during the year 1986."

14. "In any event, I had resigned from
the Corporation on July 31, 1984; this
date was the date Prior to when the
allegations of the filing of the 1099
form took place." [Declaration of Marsha
Bennett page 7 lines 15-18.

Declaration of Murray Gardner at

page 2 paragraphs 3, 4, & 5.
[(3)]. “Marsha Bennett was an
officer of Fashion Embroidery tac.,

after July 31, 1984. (emphasis mine).

{(4)]. "Marsha Bennett did not

resign as a director of Fashion
Embroidery, Inc., on July 31, 1984 or at
any other time thereafter."(emphasis
mine)

((5)]. "Marsha Bennett did not

resign as secretary/treasurer of Fashion

APPENDIX CC A-203

Embroidery, Inc. on July 31, 1984 or at
any other time thereafter.

[(10)]. "Either Marsha Bennett,
Uday Raj Sawhney or both, created the
Fashion Embroidery, Inc. 1099 tax form
in regards to Richard Millan for the tax
year 1984."(Uday Raj Sawhney is Bennetts
current husband).

Declaration of Bonnie Gardner at
page 2 paragraphs 3, 4-6.

[(3)]. "Marsha Bennett was an
officer of Fashion Embroidery Inc.,
after July 31, 1984. (emphasis mine).

[(4)]. "Marsha Bennett did not
resign as 2 director of Fashion
Embroidery, Inc., on July 31, 1984 or at
any other time thereafter." (emphasis
mine )

[(5)]. “Marsha Bennett did not
resign as secretary/treasurer of Fashion
Embroidery, Inc. on July 31, 1984 or at
any other time thereafter.

APPENDIX CC A-204

CO

[(6)]. "Either Marsha Bennett,
Uday Raj Sawhney or both, created the
Fashion Embroidery, Inc. 1099 tax form
in regards to Richard Millan for the tax
year 1984," (Uday Raj Sawhney is

Bennett's current husband).

15. "The allegations of the pleadings
State that I assisted and false and
fraudulent United States Tnternal
Revenue Service Tax Returns in behalf of
the Corporation. I never had any thing
to do with the filings of the Federal
Tax Return for the Corporation. I have
reviewed the evidence that was provided
by the other defendants, besides my
mother, this evidence Clearly
established that my name did not appear
on any of the Federal or for that matter
the State Tax Returns. This evidence, I

understand, was al] Provided to Richard

APPENDIX CC A-205

Millan. [Declaration of Marsha Bennett
page 7 lines 19 through 28.

See Declaration of Murray Gardner
pages 2 & 3 paragraphs 6-9:

[(6)]. " Some time after July
31, 1984, I was instructed by Marsha
Bennett to allow Uday Raj Sawhney to
perform an “audit" of all of the books
and records of Fashion Embroidery, Inc.
Pursuant to Marsha Bennett's
instructions, I allowed Mr. Sawhney
access to all the books and records of
Fashion Embroidery, Inc. To the best of
my recollection, Mr. Sawhney spent
approximately one week at the Fashion
Embroidery, Inc.'s offices reviewing all
of the financial information. Mr.
Sawhney subsequently issued a financial
statement for Fashion Embroidery, Inc.
for the period ending December >

1985."

APPENDIX CC A-206

ToRae “Following this work by
Mr. Sawhney, and the issuance of the
financial statement, I received
telephone calls from time to time from
Mr. Sawhney requesting information about
the financial status of Fashion
Embroidery, Inc. At all times, it was
my understar.ding that Mr. Sawhney was
seeking this information on behalf of
Marsha Bennett and as her

representative."

[(8)]. "Mr. Sawhney was also
involved in representing Fashion
Embroidery, Inc., with the Internal

Revenue Service during the year 1986."
[(10)]. "Either Marsha Bennett,
Uday Raj Sawhney or both, created the
Fashion Embroidery, Inc. 1099 tax form
in regards to Richard Millan for the tax
year 1984."(Uday Raj Sawhney is

Bennett's current husband).

APPENDIX CC A-207

PLAINTIFF HAS ALLEGED THAT
DEFENDANTS BENNETT, C. STEINBAUGH, M.
GARDNER, B. GARDNER and aided and
abetted by Michael Jessick and Uday Raj
Sawhney “BUSTED OUT" FASHION EMBROIDERY
INC., BY NOT PAYING THE EMPLOYMENT TAXES
TO THE UNITED STATES INTERNAL REVENUE
SERVICE THEREBY CREATING A SITUATION
WHERE THE INTERNAL REVENUE SERVICE WOULD
SEIZE THE ASSETS OF FASHION EMBROIDERY
INC., AND AUCTION THOSE SAME ASSETS TO
PAY THE TAX LIENS. THE DEFENDANTS IN
THIS ACTION SET UP A NEVADA CORPORATION
AND BEGAN NEGOTIATING WITH THE INTERNAL
REVENUE SERVICE TO BUY THE ASSETS OF
FASHION EMBROIDERY INC. FROM THE
INTERNAL REVENUE SERVICE FOR AN AMOUNT
APPROXIMATING $10,000.00. THESE
DEFENDANTS DID NOT REVEAL TO THE
PLAINTIFF OR THE INTERNAL REVENUE
SERVICE THAT THEY WERE THE SAME PEOPLE
RESPONSIBLE FOR THE NON-PAYMENT OF TAXES

APPENDIX CC A-208

BY FASHION EMBROIDERY INC. THIS IN FACT
DEFRAUDED PLAINTIFF OUT OF HIS OWNERSHIP
OF FASHION EMBROIDERY INC., ASSETS AND
DEFRAUDED THE INTERNAL REVENUE SERVICE

OF MORE THAN $50,000.00 IN TAX REVENUE.

The scheme worked as follows:

16. The defendants in this action

failed to pay the following taxes

September 30, 1984....... $13,086.23
December 31, 1984....... $13,666.62
September 30, 1985....... $17,399.50
December 31, 1985....... $17,679.76

ee exhibit 60 page 495.

17. On November 14, 1985, Michael

Jessick wrote the following letter to

APPENDIX CC A-209

the Internal Revenue Service in part:
SEE Exhibit 4

“The Fashion Group Ltd. applies
under section 6325 [b] of the Internal
Revenue Code, for a _ certificate of
discharge for the below listed property
of Fashion Embroidery Inc., Taxpayer

Identification Number 95-3364538, #130

Rosecrans, Avenue, Paramount,
California. List of Property
‘Al Lal

The Fashion Group Ltd. intends to
purchase the above listed property at
private sale subsequent to the approval
of this petition. We shall open escrow
as soon as this application is approved.

The above property is encumbered by
a UCC filing lien in favor of Angeltown
Inc., of which we have not received a
copy of at the time of writing this
petition. (Michael Jessick does not
reveal to the Internal Revenue Service

APPENDIX CC A-210

that Angeltown Inc, is owned by him and
his wife Debra K. Jessick.)

Fashion Group Ltd. Shall furnish
appraisals [2] by approved appraisers.

Copies of all federal tax liens are
attached to this petition. The amount of
this sale will not cover the taxpayers
total obligation to the Internal Revenue

Service. See Exhibit 4.

18. On December 2, 1985 Murray Gardner
gave to Michael Jessick a power of
attorney over "ALL MATTERS CONCERNING
FASHION EMBROIDERY, INC.,” [Exhibit 36

page 392]

19. On March 3, 1986, Murray Gardner,
the president of Fashion Embroidery
Inc., and Michael Jessick entered into
an agreement as foliows: Subject:
Letter of agreement between Michael P.

Jessick and Murray R. Gardner, Jr. for

APPENDIX CC A-211

the purposes of establishing ownership
of the stock of Nevada Corporation "The
Fashion Group Ltd." and for the purchase
of assets of California Corporation
"Fashion Embroidery Inc.™

l. Michael P. Jessick and Murray R.
Gardner, Jr. shall each own one-half
[1/2] of all issued stock of "The
Fashion Group Ltd." [A Nevada
Corporation].

2. That "The Fashion Group Ltd." a
Nevada Corporation shall purchase the
assets of "Fashion Embroidery Inc." A
California Corporation as per agreement
made with the U. S. Internal Revenue
Service for this purchase.

3. That this document is to be
replaced by a formal agreement to be
drafted by an attorney.

Agreed this 3rd Day of March 1986,
signed Murray R. Gardner and Michael P.
Jessick." See Exhibit listed no. 66 and

APPENDIX CC A-212

located at Exhibit 3 this document,

marked defendants exhibit 4013.

20. Plaintiff Richard Millan, was never
notified of the tax liens, nor was
Millan ever notified of any Board of
Directors meetings or shareholders
meetings that would have had to have
been called and held when items such as
the power of attorney of Fashion affairs
was given to Michael Jessick by Murray
Gardner, and the sale of Fashion
Embroidery Inc., Assets by the Internal

Revenue Service.

21. All defendants concealed the tax
liens, tax negotiations, power of
attorney to Michael Jessick, agreement
between Jessick and Murray Gardner, tax
sale of Fashion Embroidery Inc., assets
by the I.R:S., and the subsequent
purchase of Fashion Embroidery Inc.,

APPENDIX CC A-213

assets to Fashion Group Ltd. in May of
1987 at a forced tax seizure sale.
See Exhibit 8 page 210-211 paragraph 6l.

Request for Admissions Marsha
Bennett:

[6i]. “Even though Richard Millan
was a stockholder, you did not notify
Richard Millan of the Internal Revenue
Service intention to seize Fashion
Embroidery Inc. property during April of
1987.

[61]. Answer Marsha Bennett:
“ADMIT”

[67]. “Even though Richard Millan
was a stockholder of Fashion Embroidery
Inc., you never notified Richard Millan
that the Internal Revenue Service had
seized Fashion Embroidery Inc. property.

[67]. Answer Marsha Bennett:
"ADMIT"

SEE Exhibit 13 at page 293.

APPENDIX CC A-214

[96]. "You did not notify Richard

Millan of the Internal Revenue intention

to seize Fashion Embroidery ine.
property.

[96] Response Murray Gardner:
"ADMIT"

SEE Exhibit 71 Declaration of Murray
Gardner:

[16] "Richard Millan was never
notified after July 25, 1984 of any
shareholder meeting or directors meeting
of Fashion Embroidery, Inc."

SEE Exhibit 72 Declaration of Bonnie
Gardner:

[11] “Richard Millan was never
notified after July 25, 1984 of any
Shareholder meeting or directors meeting

of Fashion Embroidery, Inc.

22. Richard Millan had purchased 30,000
Shares of Fashion Embroidery Inc. common
Shares from Theda Williams in January of

APPENDIX CC A-215

1984 for $100,000.00 and had not sold
any of his shares to any person nor
transferred any shares to any person.
SEE Exhibit 71 Declaration of Murray
Gardner

[14] “I never purchased Richard
Millan's 30,000 shares of Fashion
Embroidery, Inc. stock."

[15]."No person or entity has ever
been reflected in any Fashion
Embroidery, Inc. records as having
purchased or been the transferee of the
30,000 shares of Fashion Embroidery,
Inc. stock owned by Richard Millan."

SEE Exhibit 72 Declaration of Bonnie
Gardner

[9] "I never purchased Richard
Millan's 30,000 shares of Fashion
Embroidery, Inc. stock."

[10] "No person or entity has ever
been reflected in any Fashion
Embroidery, Inc. records as having

APPENDIX CC A-216

purchased or been the transferee of the
30,000 shares of Fashion Embroidery, Inc
stock owned by Richard Millan.

BUT SEE Exhibit 46 at page 437 in part:
“Incorporated California Dec. 26, 1978.
Authorized capital consists of 90,000
shares common stock, $1.00 par
a “Present control succeeded
Jul 1984. 66% of capital stock owned by
Murray Gardner, 34% of capital stock is

owned by M. Bennett.

23. Defendants Bennett and C.
Steinbaugh have violated Title 18
Section 1341 (Mail Fraud) together aided
and abetted by M. Gardner, B. Gardner
and Fashion Embroidery Inc. The
predicate acts are as follows:

As Exhibit 23-Letter from Jack
Peters to Murray Gardner 11-22-83

as Exhibit 24-Letter from Jack
Peters to Richard Steinbaugh 11-22-83

APPENDIX CC A-217

3. Exhibit 26-Letter from Eric
Dean to Douglas Martin 2-24-84 |

4. Exhibit 30-Letter from Richard
Millan to Richard Steinbaugh 12-19-83

3. Exhibit 32-Letter from William
Pierce to Fashion Embroidery re: 1984
taxes 3-19-85

6. Exhibit 35-Letter sent with
financial statement 3-14-85

a Exhibit 37-Letter from
Lawrence D. Frenzel to Murray Gardner
9-30-86

8. Exhibit 39-Payoff Agreement
Form from Michael Jessick to the IRS re:
Fashion Embroidery 3-5-86

o. Exhibit 40-Letter from IRS to
Murray Gardner 4-3-87

10. Exhibit 4l1-Notice of seizure
of Fashion Embroidery by IRS 6-2-87

ll. Exhibit 42-Letter from Uday
Sawhney to Murray Gardner 7-21-86

12. Exhibit 44-1984 Tax Forms

APPENDIX CC A-218

rrr

13. Exhibit 45-Fashion Embroidery
Financial Statement as of 12-31-84

14. Exhibit 46-Dun and Bradstreet
Report 10-20-86

15. Exhibit 47-1984 FUTA Tax
Return

16. Exhibit 48-1986 FUTA Tax
Return

17. Exhibit 5l-Letter from Murray
Gardner to IRS with reference to Marsha
Bennett 11-12-84

18. Exhibit 52-Dun and Bradstreet
Report 5-18-82

19. Exhibit 54-1099-MISC Forms for
1984

20. Exhibit 55-Letter from William
Pierce re Fashion Embroidery re: 1984
Balance sheet

21. Exhibit 56 1984 California
Corporation Franchise Tax Return

22. Exhibit 58-CV86-7062 WDK (Gx)

Application of Internal Revenue Service

APPENDIX CC A-219

to Enter Premises to Effect Levy and
Declaration in support Thereof 10-29-86

23. Exhibit 59-CV86-7062 WDK (Gx)
Order For Entry On Premises to Effect
Levy (by IRS)

24. Exhibit 60-CV87-03057 IH
Application of Internal Revenue Service
to Enter Premises to Effect Levy and

Declaration in support Thereof 5-12-87

24. Exhibit 61 Fashion Embroidery Inc.
Check Register and Exhibit 73 marked as
defendants 4254.

1. Check for $20,000.00 from
Jolene Runner to Richard Steinbaugh
August 26, 1983.

ro Check #015015 for
$20,000.00 Drawn on Fashion Embroidery,
signed by Richard Steinbaugh in favor of

Murray Gardner August 26, 1983

APPENDIX CC A-220

3. Check # 587 drawn on Murray
Gardner's personal account 81 in favor
of Richard Steinbaugh for $20,000.00

4. Fashion Embroidery check
#15109 for $450.00 in favor of Jolene
Runner 9-15-83;

5. Fashion Embroidery check
#15228 for $450.00 in favor of Jolene
Runner 10-17-83;

6. Fashion Embroidery check
#15358 for $450.00 in favor of Jolene
Runner 11-8-83;

7. Fashion Embroidery check
#15441 for $450.00 in favor of Jolene
Runner 12-13-83;

8. Fashion Embroidery check
#15565 for $450.00 in favor of Jolene
Runner 1-13-84;

9. Fashion Embroidery check
#337 for $450.00 in favor of Jolene

Runner 2-22-84;

APPENDIX CC A-221

10. Fashion Embroidery check

#492 for $450.00 in favor of Jolene
Runner 3-11-84;

ll. Fashion Embroidery check

#598 for $450.00 in favor of Jolene
Runner 11-8-84;

12. Fashion Embroidery check

#633 for $450.00 in favor of Jolene
Runner 9-19-84;

13. Fashion Embroidery check

#664 for $450.00 in favor of Jolene
Runner 6-19-84;

14. Fashion Embroidery check

#664 for $450.00 in favor of Jolene
Runner 7-16-84;

15. Fashion Embroidery check

#1061 for $450.00 in favor of Jolene
Runner 8-16-84;

16. Fashion Embroidery check

#1164 for $450.00 in favor of Jolene
Runner 9-11-84;

APPENDIX CC A-222

rrr ——“‘—C

17. Fashion
#1241 for $450.00 in
Runner 10-9-84;

18. Fashion
#1348 for $450.00 in
Runner 11-7-84;

19. Fashion
#1441 for $450.00 in
Runner 12-10-84;

20. Fashion
#1538 for $450.00 in
Runner 1-4-85;

21. Fashion
#1669 for $450.00 in
Runner 2-6-85;

22. Fashion
#1762 for $450.00 in
Runner 3-11-85;

23. Fashion
#1882 for $450.00 in

Runner 4-10-85;

APPENDIX CC

Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery

favor of

check

Jolene

check

Jolene

check

Jolene

check

Jolene

check

Jolene

check

Jolene

check

Jolene

A-223

24. Fashion

#2020 for $450.00 in
Runner 5-21-85;

25. Fashion
#2125 for $450.00 in
Runner 6-21-85;

26. Fashion
#2197 for $450.00 in
Runner 7-22-85;

27. Fashion
#2352 for $450.00 in
Runner 9-12-85;

28. Fashion
#2419 for $450.00 in
Runner 10-3-85;

29. Fashion
#1028 for $450.00 in
Runner 10-25-85;

30. Fashion
#1120 for $450.00 in

Runner 11-13-85;

APPENDIX CC

Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery
favor of
Embroidery

favor of

check

Jolene

check

Jolene

check

Jolene

check

Jolene

check

Jolene

check

Jolene

check

Jolene

A-224

31. Fashion Embroidery check
#1859 for $900.00 in favor of Jolene

Runner 4-18-86.

25. Mailgram sent by Western Union
Portland office to Murray Gardner in
Paramount, California as confirmation of
delivery of telegram to Richard Millan
in Costa Mesa, California. SEE Exhibit

6.

26. Letter sent by California Franchise
Tax Board to Richard Millan regarding
fraudulent 1099 tax form filed by Marsha
Bennett and Uday Raj Sawhney (her

husband) in August of 1988.

27. Defendants Bennett and Cc.
Steinbaugh have violated Title 18
Section 1343 (Wire Fraud) together aided

and abetted by M. Gardner, B. Gardner,

APPENDIX CC A-225

Fashion Embroidery Inc. The predicate

acts are as follows:

1. Telephone call from Murray
Gardner to Western Union operator in
Reno, Nevada on July 23, 1984. SEE
Exhibit 6.

2. Telegram sent by Marsha
Bennett and Murray Gardner to Richard
Millan on July 23, 1984 by interstate
wires of Western Union. SEE Exhibit 6,

Declaration of Paul Schmidt.

28. Defendants Bennett and c.
Steinbaugh have violated Title 18
Section 152 (Bankruptcy Fraud) together
aided and abetted by M. Gardner, B.
Gardner, Fashion Embroidery Inc. The
predicate acts are as follows:

1. Fraudulent Filing of bankruptcy
petition by Richard S&S. Steinbaugh LA
84-08138 JD. SEE Exhibit 5 pages
73-109.

APPENDIX CC A-226

2. Fraudulent Filing of bankruptcy

petition by Colleen S. Steinbaugh LA

84-19838 CA. SEE Exhibit 4 pages 33-72.

3. Violation of Title 28 U.S.C.

1746.

29. Defendants Bennett and Cc.
Steinbaugh have violated The Securities
Act of 1933 and the Securities Exchange
Act of 1934 including the following
provisions. Sections 10b, of the
Securities Exchange Act, Rule 10b-5 and
Section 17 of the Securities Act of 1933
together aided and abetted by M.
Gardner, B. Gardner, Fashion Embroidery

Inc.

30. Defendants Bennett and C.
Steinbaugh have violated The Racketeer
Influenced and Corrupt Organizations Act
(Rico) Title 18 Section 1962 (d)
Conspiracy to violate RICO provisions

APPENDIX CC A-227

together aided and abetted by M.
Gardner, B. Gardner and Fashion

Embroidery Inc.

31. Defendants in this action have said
there is no continuity in this action
regarding these defendants. This fraud
began in early 1983 and continues to
this present day. The relationship
between the bankruptcy petitions and the
bust-out of Fashion by these defendants
is completely intertwined and the
multiple predicate acts as described
above only expose the most outrageous
lawlessness perpetrated by these
defendants on plaintiff, the State of
California the United States Bankruptcy
Court and the United States Internal

Revenue Service.

APPENDIX CC A-228

0 QO) EE eV

EXCERPTS OF REPORTER'S OFFICIAL
TRANSCRIPT OF PROCEEDINGS, MONDAY, JUNE
13, 1988:

THE COURT: WE WILL SET IT FOR
TRIAL SEPTEMBER 6, AT 9:30 A.M.

MR. MILLAN: COULD I -- AS I
SAY, IS THERE SOMETHING --

THE COURT: I DIDN'T HEAR YOU.

MR. MILLAN: COULD I RESPOND
3 * i

THE COURT: NO. I AM SETTING
IT FOR TRIAL DATE.

CAN'T YOU TRY IT THAT

DATE?

MR. MILLAN: NO.

THE COURT: WELL, WHY NOT?

MR. MILLAN: BECAUSE --

THE COURT: GO TO THE LECTURN,
PLEASE.

MR. MILLAN: I'M SORRY.

THE COURT: TELL ME WHY YOU

CAN'T TRY IT ON THAT DATE.

APPENDIX DD A-229

ccc aia

| MR. MILLAN: BECAUSE ONE YEAR
| AGO, I -- I -- I HAD TO GET -- I HAD TO
GET AIRLINE SEATS AND TICKETS FOR THE
SUMMER GAMES.
IT COST ME ALMOST $18,000 AND
THE THE GAMES ARE DURING THAT MONTH,
YOUR HONOR.
THE COURT: ALL RIGHT.
WE WILL SET IT IN
OCTOBER, THEN.
THE COURT CLERK: OCTOBER 18?
(NO RESPONSE. )
THE COURT CLERK: OCTOBER 117
YOU CAN HAVE THE 4TH OR
THE 11TH.
THE COURT: WELL, SET IT FOR
TRIAL OCTOBER 4, AT 9:30.
I WANT ONE OF YOU
GENTLEMEN TO GIVE NOTICE OF THIS AS
WELL.
MR. LUBELL: I'LL GIVE THE
NOTICE YOUR HONOR.

APPENDIX DD A-230

THE COURT: VERY WELL.
THE COURT: I'LL SIGN THE
PRETRIAL CONFERENCE ORDER AND IT's

SUBMITTED.

APPENDIX DD A-231

EXCERPTS FROM LETTER FROM UDAY R.
SAWHNEY, CPA TO MR. MURRAY GARDNER DATED
JULY 21, 1986:

RE: Our conversation of today.

Dear Murray,

As you know I. simply state things as
they are, and usually this is why I am

hired in the first place.

Today you made the remark that you did
not know what my bill was and how much I
had already been paid towards it. I
enclose as a reply my FEBRUARY statement

which apparently you never received.

I hope $3 answers your question
satisfactorily and emphasizes my extreme
investment of time and effort in your
firm. I believe this time to be well
worth it as I think you will in the end

pull out from your current loss

APPENDIX EE A-232

Situation -(in your very own unique

way).

Murray, I am available to help and as
you notice I have not been quick with
the bills. After-all who knows better
than myself what you can or cannot pay?

(Emphasis added. )

In any case Murray I would appreciate
some monthly payment for the services I
have rendered to Fashion. In this case
I will accept whatever you send me, as I

know you to be an honest man.

If you have any questions please do not

hesitate to call me. Please give my

best regards to Bonnie

Murray you have my luckiest wishes.

APPENDIX EE A-233

Very truly yours,

Uday R. Sawhney, CPA"

APPENDIX EE A-234

CHRONOLOGY OF THE EFFORTS BY MILLAN TO
OBTAIN AN ORDER FROM THE DISTRICT COURT
ON THE DISQUALIFICATION OF LUBELL:

Le Petitioner Richard Millan
("Millan") filed a concurrent Motion to
Recuse the Hon. William J. Rea and
attorney Steven Lubell on June 13, 1988
(C.R. 62). However, the docket sheet of
the District Court does not mention the
motion to disqualify attorney Steven
Lubell as should have been noted by the
docketing clerks of the United States
District Court. The facing page of
plaintiff Richard Milian's Notice of
Motion and Motion to Recuse the Hon.
William J. Rea, Judge of the United
States District Court also shows that
the Motion was filed concurrently with a
motion to disqualify attorney Steven
Lubell. (See: Appendix H, page A-57.)

The Motion to disqualify Judge Rea was

APPENDIX FF A-235

referred to the Honorable Edward
Rafeedie for determination (C.R. 63).

Ze On July 8, 1988, Mrs. Judy
Matthews, United States District Court
Clerk to the Hon. Edward Rafeedie,
telephoned Millan and notified Millan
that Judge Rafeedie had taken the
Motions to recuse the Hon. William J.
Rea and to disqualify attorney Steven
Lubell off calendar and would not hear
them on July 11, 1988 as had been
noticed. It was further confirmed
during that conversation with Mrs. Judy
Matthews that Judge Rafeedie would hear
both Motions on the new hearing date.

De On July ll, 1988, Millan
traveled to the United States District
Court in Los Angeles to inquire of Judge
Rafeedie when the new hearing date would
be set.

4. On July ll, 1988, Clerk Judy
Matthews told Millan, "The Court has

APPENDIX FF A-236

instructed me that the motions stand as
submitted and that there will be no oral
arguments on these motions permitted and
you can expect a decision within ten
days."

a. On or about July 21, 1988,
Millan telephoned Clerk Judy Matthews to
inquire if a decision had been’ reached
on the submitted motions. Clerk Judy
Matthews told Millan that no decision
had as yet been made and for Millan to
call back on July 26, 1988.

6. On July 26, 1988, Millan once
again telephoned Clerk Judy Matthews and
was told no decision had been reached as
yet.

. - On July 29, 1988, Millan
telephoned Clerk Judy Matthews and
requested that Millan be given time to
speak to Judge Rafeedie ex parte on

motion day August l, 1988.

APPENDIX FF A-237

8. Clerk Judy Matthews refused to

allow Millan time to address the Court
but told Millan to come into Courtroom
14 and she would try to find out for
Millan when he could expect a decision
from the Court.

9. Millan went into Courtroom 14
and waited. A few minutes later Clerk
Judy Matthews called Millan from his
seat in court and requested the case
name and number. Millan wrote them down
for Clerk Judy Matthews and she then
went into chambers. A few minutes later
Clerk Judy Matthews returned into
Courtroom 14 and notified Millan that
his motions had been denied and that a
confirming written order would be sent
out that same week.

10. On August 12, 1988, Millan had
not received the promised orders and

telephoned Clerk Judy Matthews. Millan

APPENDIX FF A-238

Was assured the the written orders would
be sent out that week.

ll. On August 29, 1988, Millan had
not received the written orders and
again telephoned Clerk Judy Matthews.
Millan was told the court had not ruled
as yet.

12. On August 31, 1988, Millan
received the order denying plaintiff's
motion to recuse the Hon. William J.
Rea. No order was received on the
motion to disqualify attorney Steven
Lubell.

13. On September 13, 1988, Millan
telephoned Docket Clerk 3 to inguire if
the Orders had been entered in the court
docket. Millan was told that only the
Order regarding Judge Rea was entered in
the record (C.R. 73).

14. On September 13, 1988 Millan
telephoned Marva Dillard, the clerk for
the Hon. Judge William 3. Rea, and

APPENDIX FF A-239

inguired about the Order to deny the
disqualification of attorney Steven
Lubell. Marva Dillard told Millan that
Judge Rafeedie was to rule on that
motion.

15. Millan telephoned Clerk Judy
Matthews and was told that the Court had
ruled on the motion to disqualify
attorney Steven Lubell and that Millan's
motion had been denied and entered into
the record.

16. From September 14 +#through
September 27 Millan telephoned Docket
Clerk 3 and Judge Rea‘s Clerk eight
times about the motion to disqualify
attorney Steven Lubell. Each clerk said
they had no information about that
motion-

17. From October 18 through
October 20, 1988, four more telephone
calls were made by Millan to Docket
Clerk 3 and to Judge Rea‘s Clerk. Still

APPENDIX FF A-240

no information on the motion to disqual-
ify attorney Steven Lubell.

18. On or about October 21, 1988,
Millan spoke to Miss Maggie Poppy,
United States Court Docket Clerk 3.
Miss Poppy told Millan that the motions
in question had been misplaced. Miss
Poppy asked Millan if he had conformed
copies of the motions. Millan informed
Miss Poppy that he did have conformed
copies and that he would bring them to
the Courthouse in Los Angeles. Millan
then drove to the District Court in Los
Angeles and provided Miss Poppy, Docket
Clerk 3, with the conformed copies of
the motions andall relevant material
pertaining thereto. Miss Poppy told
Millan that she would keep working on
this issue unti)] it was resolved.

19. On October 27, 1988 Miss Poppy
informed Millan that she had spoken to
Judge Rafeedie's Clerk, Judy Matthews,

APPENDIX FF A-241

and that Judy Matthews had assured her
that the decision and order would be
sent to Millan by the next week.

20. From October 28, 1988 through
November 28, 1988, Millan telephoned
Miss Poppy, Docket Clerk 3, several
times and still no order was forthcom-
ing.

21. On or about December 5, 1988,
Millan telephoned District Court Docket
Clerk Maggie-Poppy and was informed by
Miss Poppy that she had been relieved of
Docket No. 3 and was now working on
another docket number and could _ no
longer help Millan in his effort to
resolve this matter.

~ 22. The relieving of Maggie Poppy
from Docket 3 effectively silenced and
closed the only help Millan would get

from the District Court.

APPENDIX FF A-242

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_2548%3A2. Public record. Not legal advice.