Re: 2/1/02 - [Marchese v. Dobry] Memorandum of law in support of Mr. Dobry’s Subpoena
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
IN RE:
RICHARD MARCHESE,
plaintiff,
v.
GARY DOBRY,
defendant
Case No. 00CV5606
Judge Marovich
Magistrate Judge Levin
Northern District of Illinois
MEMORANDUM OF LAW IN SUPPORT OF MR. DORBY’S SUBPOENA
This Memorandum of Law is filed in opposition to the motion of certain persons to quash a subpoena to Raging Bull. As a preliminary matter, a number of alias "persons" have not contested the subpoena and the subpoena should be complied with as to them regardless of this Court’s ruling on the motion to quash, by certain person.
This case is a defamation action by the Plaintiff against Defendant. The Complaint was filed on September 12, 2000. An Amended Complaint was filed on November 27, 2001. Defendant filed on January 14, 2002, a Rule 12 (b)(6) motion to dismiss the Amended Complaint. The 12 (b)(6) motion is filed under seal and remains pending.
FACTS
This case, which on the surface seems to be a festival of juvenile name-calling, is part of a larger sequence of events. This case is about huge sums of money earned on the Internet and it is about intimidation. The following references to public materials puts this lawsuit, and Mr. Dobry’s discovery request in context.
New Hampshire Lawsuit
After Mr. Dobry made some posts on the Internet in 1998, he was sued in the United States District Court of New Hampshire; Zwebner v. Dumont. et al.. 98 CV, 682. The Amended Complaint, in that case, alleged, among other things, defamation and invasion of privacy. On August 23, 2000, that suit was resolved with entry of an agreed, unenforced judgment. On November 13, 2001, Mr. Zwebner sought to have the judgment enforced in New Hampshire and his motion was denied by the court.
California Lawsuit
In March 2000, Mr. Dobry was sued in the Central District of California by Joseph Pettera, Access Tradeone and Pittera v. Jacalyn Deaner. et al., Civil Number 00-03088. After failing to obtain an injunction on April 17, 2000, Mr. Pittera voluntarily non-suited the lawsuit. The relationship between Mr. Pittera and Mr. Marchese is described in Mr. Dobry’s Appendix Exhibits C and D.
Mr. Emshwiller’s Book
In 2000, Mr. John R. Emshwiller, Wall Street Journal Reporter, published his book on the burgeoning field of penny stock price manipulation on the Internet, Scam Dogs and Mo Mo Mamas, Harper Business (2000). Chapter 14 of that book, attached hereto as Exhibit 1, deals extensively with the events and personalities (notably Mr. Marchese and Ms. Janice Shell) out of which this lawsuit arose. Indeed, the allegations of the Complaint herein mention Ms. Shell. Her contact with MR. Marchese is described in Mr. Dobry’s Appendix, Exhibit D.
Who Is Mr. Marchese?
The Plaintiff, Mr. Richard Marchese tells nothing about himself in the Amended Complaint except that he is a citizen of Nevada. He in fact has a background in the securities industry. He entered into a consent decree with the SEC in 1999, which in part states:
On the basis of this Order and the Offer of Settlement submitted by Marchese, the Commission finds that:
A. From at least 1987 through 1989, Marchese was president and chief operating officer of Power Securities Corp. ("Power"). During the same period, Power was a broker-dealer registered with the Commission pursuant to Section 15 of the Securities Exchange Act of 1934;
B. On December 23, 1998, in Securities and Exchange Commission v. Power Securities Corporation, et al. (C.A. No. 90-S-1579), The United States District Court for the District of Colorado entered a final judgment permanently enjoining Marchese from violating Section 17 (a) of the Securities Act of 1933, Section 10 (b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder; and
C. The Commission alleged in Securities and Exchange Commission v. Power Securities Corporation, et al. (C.A. No. 90-S-1579) that Marchese, during 1988, engaged in repeated fraudulent conduct, including (1) directing that registered representatives of Power make fraudulent misrepresentations and omissions in connection with the offer and sale to customers of several penny stocks, (2) manipulating the market for the securities of Art Cards, Inc. and Star Publications, Inc. both penny stocks, (3) directing excessive markups of the prices of several penny stocks sold by representatives of Power and (4) failing to disclose his control over the activities of Allied Capital Group, another broker-dealer.
IV.
In view of the foregoing, it is in the public interest to Impose the sanctions specified in the Offer of Settlement.
Accordingly, IT IS ORDERED THAT:
A. Marchese is barred from association with any broker, dealer, investment company, investment adviser or
municipal securities dealer; and
B. Marchese is barred from participation in any offering of penny stock.
By the Commission.
It is Mr. Dobry’s contention in his defense of this defamation case that when Mr. Dobry lost money in stock investments touted on the Internet, including an investment in AZNT (Amazon Natural Treasures), that Mr. Marchese was one of the individuals instrumental in the events which lead to the loss of his money.
Raging Bull
First, the movants tell us that their First Amendment right to communicate on Raging Bull must be protected. What is Raging Bull and what is posted on it? Raging Bull says it is a place for folks to talk about investments, publicly traded stocks. However upon a moment’s reflection, given the strictures against trading on insider information, there are really only two kinds of information about stocks which can end up on Raging Bull. First, is publicly available information which is better obtained at its original source than second hand on Raging Bull. Second, is information which is complete balderdash (i.e. when my big toe throbs in the morning, GM stock always goes up that day). While both of these types of speech are surely protected by the First Amendment, we must consider this reality in any balancing test.
But, hope springs eternal among many folds that a sparkling jewel of information on these boards will lead a day-trader to sudden riches. Recognizing this fantasy, the boards also contain information posted by stock fraudsters who cruise these boards like sharks. As documented by Emshwiller in his book, the classic Internet scam is "pump-and-dump." It is helpful in this scheme to have the ability to orchestrate a lot of Internet traffic about a particular stock. First, fraudsters buy low, they generate traffic, then they sell high. Next, they short the stock low, dump it with a cacophony of bad news on the Internet, then profit on the short. The Raging Bull message board, for better or worse, intended or unintended, is a godsend for this activity.
"TOS" The First Amendment In a Banana Republic
Ironically, the claim of the movants that they have First Amendment rights on the Raging Bull board is belied by the agreement of every poster to abide by the terms of service, "TOS". These terms are enforced by a monitor, usually, acting only when someone complains to the monitor, by "clicking" on the report TOS violation logo. Once a posting is deleted as a TOS violation, it is no longer publicly accessible.
The TOS-monitor operates in a First Amendment vacuum. Raging Bull is a commercial enterprise and is no more subject to the First Amendment than is a commercial shopping center, which is typically given a right to regulate speech within its confines.
What Are The Subjects Of The Subpoena Talking About?
Stocks, investments, factors which affect the markets? No, death threats, vilification, taunting and intimidation of Mr. Gary Dobry.
Because of the continuing blizzard of mutual insults appearing on the Raging Bull, AZNT message board after the lawsuit was filed and following cross-motions for sanctions, Judge Marovich of the Northern District of Illinois entered an agreed protective order (attachment hereto Exhibit 11) on April 16, 2001, providing that neither party, nor their agents would comment on the other, including on the Raging Bull AZNT message boards. Nevertheless, the derogatory comments about Mr. Dobry continued unabated.
John Doe I
Mr. Doe 1 contends that he has four screen aliases which he identifies as "SSLEMSHEX", "SALEMSHEX13," "SALEMSHEX21" and "CHUZZLEWIT." The four posts attached to this brief as Exhibit 111 violate the Protective Order entered by Judge Marovich. The post of October 22, 2001, was part of an orchestrated campaign to intimidate Mr. Dobry before his deposition in this case.
John Doe II
Mr. Doe 11 posts under the screen alias which he identifies as "SUBLIME." Attached hereto is Exhibit IV are three representative posts by "SUBLIME’ preceded by a post from "FELONTHECANVAS" to which "SUBLIME" initial post responds. These posting have nothing to do with discussion of stock and are disparagements and insults of Mr. Dobry.
John Doe III
Mr. Doe III posts under the alias of "SCION." Mr. Doe III submitted a first and a second affidavit and it is plainly evident from examining the signatures on the two affidavits that they are signed by two different people. On information and belief, John Doe III is Robert Leslie Deak. Mr. Deak’s father was the original Deak in Deak Perera. On information and belief, Mr. Robert Leslie Deak is involved in Deak Capital Markets with Mr. Marchese. Mr. Marchese’s connection with that organization is described in Mr. Dobry’s Appendix. John Doe III has found time as the president of a corporation to make hundred of posts about Mr. Dobry that are antagonistic, violate the Protective Order, and have contained physical threats. Attached hereto as Exhibit V are postings by John Doe III.
John Doe IV
Mr. Doe IV posts under the alias "FELONTHECANVAS." Mr. Doe IV has posted numerous postings attacking Mr. Dobry, including posting public documents regarding this case, a specific violation of the Protective Order. Attached as Exhibit VI are sample posts by Mr. Doe IV.
John Doe V
Mr. Doe V posts under the alias "LEVELHEAD." Two of these attack Mr. Dobry and the third indicates a remarkable grasp of details of the collapse of the AZNT stock price for a disinterested investor.
Janice Shell
Janice Shell has submitted two affidavits. In her second affidavit, she asserts that she is aware of the April 16, 2001 Protective Order and said that she has, "done nothing that would cause any party to be in violation of that order." However, since she has a business relationship with Mr. Marchese, outlined in Mr. Dobry’s Appendix, she herself has violated the Order and also caused Mr. Marchese to be in violation of the Order. Whatever Ms. Shell’s business is, she has had time to post hundreds of postings deprecating Gary Dobry on Raging Bull. If she truly believes that he suffers from the personality disorder she identifies in her affidavit, then this persistent, almost daily taunting of Mr. Dobry is particularly cruel. Furthermore, she has not hesitated to pass along threats of physical violence against Mr. Dobry. Examples of her posts are attached as Exhibit VIII. as a person who has accepted payments from the Plaintiff for services related to this lawsuit, it is disingenuous and just plain wrong for her to contend that she has not knowingly violated the Protective Order. Her name appears in the allegations made by Mr. Richard Marchese in his Complaint. If Ms. Shell does not want to be a witness in this type of case, she could return her focus to Art History rather than her now legendary role on the Internet of deflating the value of stocks.
Jason Nelbert
Jason Nelbert has submitted two affidavits implying that his name is Jason Nelbert. On information and belief, Mr. Dobry believes that his name is actually Kenneth Wiseman and that Jason Nelbert is a pseudonym. this is corroborated in 3 of his affidavit in which he indicates that one of his screen names has been "Ken_S_W." On information and belief, other screen names used by Mr. Wiseman, a/k/a Mr. Nelbert, are "wulff" and "ratz_lauging_at_you." Under these several names, this person has posted numerous messages taunting Mr. Dobry and violating the Protective Order. Examples of his postings are attached as Exhibit IX. MR. "Nelbert" is associate of Mr. Marchese. The relationship is described in Mr. dobry’s Appendix.
Argument
Mr. Dobry incorporates herein his motion to quash anonymous affidavits and his memorandum of law in support thereof.
In re Subpoena duces Tecum To America Online, (#40570; January 31, 2000), (attached hereto as Exhibit VIII), the Circuit Court of Virginia recognized both the benign, broad sweep of the First Amendment and the exceptions to its protection. In a well researched, unpublished decision, the court upheld the subpoenas in that case and ordered an end to the anonymity of the AOL posters. What is particularly pertinent in the court’s reasoning was its observation that the First Amendment was not designed to protect all forms of expression. The court specifically noted on page 5 of the attached slip opinion that the First Amendment does not protect obscenity, or libelous statements, or fighting words. the court applied a test to determine whether identities should be revealed consisting of: (1) the court must be satisfied by the pleadings or evidence supplied to the court; (2) that the party requesting the subpoena has a legitimate good-faith basis to contend that it may be the victim of conduct actionable in the jurisdiction where suit was filed; and (3) the subpoenaed identity information is centrally needed to advance that claim.
In this case, Mr. Dobry has supplied to this Court pleadings and evidence which reveal that a series of postings on the raging Bull message board over a period of several years have served no purpose and had no objective except to taunt, harass and threaten Mr. Dobry. Furthermore, following the entry of the Protective Order, many of these postings have violated the Order of Judge Marovich. Make careful note that there is basically no discussion on the AZNT message board except a continuing attack on Gary Dobry. In the appendix, Mr. Dobry has presented evidence outlining connections between Joseph Pittera, Richard Marchese, Kenneth Wiseman (a/k/a Jason Nelbert) and Janice Shell. Several of these people have admitted in their affidavits posting under multiple aliases. Mr. Dobry believes that these people and potentially others whose identities he seeks are acting in concert with Mr. Marchese to violate the Protective Order and to try to goad Mr. Dobry into a reciprocal violation.
These contentions which can only be proven with the identity and possibly testimony of these alias posters plainly demonstrate a violation of the Protective order. The violation of the Protective Order is particularly significant because the Plaintiff contends in Court in Chicago that he has done nothing to violate the Protective Order and that Mr. Dobry has violated the Protective Order. Any violation of the Protective Order by or on the behalf of Mr. Marchese does not deserve protection through anonymity.
The subpoenaed identity of the posters is simply the only way to establish whether or not they acted in concert with Mr. Marchese to violate the Protective Order. Again it must be emphasized that over the course of the last three years almost none of these posters have had anything at all to say about the AZNT stock, but have concentrated their posts exclusively on attacking Mr. Dobry. Why?
In the case at bar, the court should recognize that the speech engaged in here is not commentary about stocks, or public issues, or opinions about stocks or anything at all except grinding, pointed derogatory comments about Mr. Gary Dobry designed to intimidate and provoke him, which, if made by the Plaintiff, or his agents, violates District Judge Marovich’s order of April 16, 2001.
Much of the movants’ brief focuses on legislation which impinged on the First Amendment. In FEC v. Massachusetts Citizens For Life, Inc., 479 U.S. 238 (1986), the court held that a compelling state interest in necessary to justify any infringement (by legislation) on First Amendment freedom. In Reno v. American Civil Liberties Union, 521 U.S. 844, 370 (1997), the court was again dealing with the potential intrusion into First Amendment Rights, The Communications Decency Act of 1996, not a dispute between private parties. Apollo MEDIA Corp. v. Reno, 19 F Supp.2d 1081 (C D Cal 1998), affirmed an appeal without opinion 526 U.S. 1061 (1999) was again an attack on the Communications Decency Act of 1996, not a dispute between private parties.
In conclusion, this Court, following the reasoning of the Virginia Act Case should deny the motion to quash for the aforesaid reasons and require Raging Bull to provide the fullest possible identification available to it of the persons identified in the subpoena with the exception of the 68 persons deleted by agreement of counsel because their identity had previously been provide by Raging Bull to Plaintiff Richard Marchese.
Respectfully submitted,
GARY DOBRY
by ______________________
One of His Attorneys
Donald L. Johnson
33 North Dearborn Street, Suite 1401
Chicago, Illinois 60602
ARDC No. 1342460
Tobin M. Richter
53 West Jackson Boulevard
Suite 560
Chicago, Illinois, 60604
ARDC No. 02333449
EXHIBITS
I. Ch. 14 of John R. Emshwiller’s Book
II. Agreed Protective Order April 16, 2001
III. AZNT postings made by "salemshex21" to Gary Dobry
IV. AZNT postings made by "sublime"
V. AZNT postings made by "scion"
VI. AZNT postings made by "felonthecanvas"
VII. AZNT postings made by "levelhead"
VIII. AZNT postings made by "Ken_S_S"
IX. AZNT postings made by "Janice 456"
X. In re Subpoena duces Tecum To America Online, (#40570; January 31, 2000) |
