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Old August 9th 08, 02:50 AM posted to rec.games.chess.politics,rec.games.chess.computer,rec.games.chess.misc,alt.chess
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Default Bill says run!

On Fri, 8 Aug 2008 19:00:36 -0600 (MDT), wrote:

17 Jan 2008
"1. Do Nothing. With this option the board lets the NY litigation take
its course, informing its membership that the Board cannot make any
comments on this matter while litigation is pending. US Chess will be
pointing the finger directly at Truong, in the form of a cross action, if
the lawsuit survives the motion to dismiss."
Very unappealing.
I believe that Sloan would drop his suit in return for Truong's
resignation, but Truong won't resign.

Sloan has stated that he would drop his suit if USCF hired an internet
expert and Truong agreed to resign if the expert reported that he was the
fake Sloan. But Truong won't agree to that either, and even if he did
agree, if the expert reported that it was 99.99% certain Truong was the
fake Sloan, Truong would say that wasn't good enough.
I would like the other counsel (Mike Matsler) to speak to Sloan
immediately, but we probably need to clear this with Jeremy Brown. Once
Sloan is contacted, I believe Matsler is likely to either work out a quick
deal or report that it's hopeless; Sloan is not the type to delay anything.
After Matsler speaks to Sloan, maybe we send the statement privately to
Truong and give him a day or two to consider it, then make it public if he
doesn't resign. At that point we can better consider the options of hiring
the expert and/or asking a judge to remove Truong.

Bill Goichberg
"Expert Assistance"
17 Jan 2008
Hello:
Unfortunately, I have been on vacation and traveling internationally since
Dec 21, and I will not return until Jan 9. I will be back in the office
Jan 10. As a result, I have been slow to respond to a number of your
recent emails. Before I left for vacation I started drafting some thoughts
on the current status, and I have added to those thoughts below. If any of
the comments seem disjointed, it is because some of it was drafted before I
read the recent emails.
Background. As you of course know, we now have two reports that implicate
Truong in the “Fake Sam Sloan” debacle; one report being Mottershead, and
another report, provided without any solicitation, by a federation member.
Additionally, my office has done some basic vetting of the data, and we did
not find any factual errors in the Mottershead report based on this limited
amount of work by our firm.
We have asked Truong to formally admit or deny whether he is involved, and
he has not responded. We have asked him to provide his IP address for his
home computers at his current and last residence, and he has not responded.
We have asked him to provide any proof that he is not involved in the Fake
Sam Sloan postings, and the only response was a fax from his wife
containing a plane ticket and his pay stub for his new job; this fax is not
persuasive for me because we only need to show that Truong was behind any
one of the many Fake Sam Sloan posting to meet our objectives (for USCF to
defend itself in litigation, for USCF to persuade Truong to resign, and,
potentially, for USCF to convince a judge to remove Truong as a director).

We did also receive some allegations of him abusing the child of his
current wife, Polgar. While these allegations are not relevant to the
inquiry into whether he is involved in the Fake Sam Sloan postings, they
could perhaps be relevant in a later inquiry about whether his removal from
the board is “in the best interest of the corporation.”

It looks like Chubb recently told US Chess that it would not be covering
litigation costs after the 12b6 motion; I do not know the details of this,
as I just saw it referenced in a recent email to me.
Lastly, the Board feels like it needs to take action on this matter
fairly quickly, and the proposed action is to ask Truong publicly to resign
– additionally, the Board wants to determine if Sloan would drop his suit
against Truong if Truong resigns.
My Talks with Proskauer. As you know, it took me a number of weeks before
I could get Proskauer on the phone, due to a number of reasons, including
Proskauer’s then pending termination of Truong and Polgar. I was able to
have a phone conference with both Jeremy Brown and one of their corporate
law attorneys. First, Jeremy was clear that he did not think Chubb would
pay for an expert now, so he rebuffed me quickly on that. Second, Jeremy
was unwilling to have any of their corporate law attorneys perform some key
research about the ability to remove Truong as a board member because,
again, he did not believe Chubb would pay for it. I did quiz their
corporate attorney on the phone about her opinion about Illinois law on
this subject, and she was not really helpful.

My Firm’s Research Illinois Law. We did some very basic research
in-house here, and we quickly started to focus on a particular Illinois
statute that allows a nonprofit organization with voting members to file a
lawsuit requesting that a court remove a director. The standard is whether
the board member "engaged in fraudulent or dishonest conduct or has grossly
abused his position to the detriment of the corporation," and "removal is
in the best interest of the corporation." This would be in the form of a
cross claim in the current litigation or a new lawsuit with a fairly simple
complaint, asking a judge to remove Truong, based on the Illinois statute
that allows a court to do so. Illinois Compiled Statutes Annotated, Ch.
805, Act 105 (105/108.35 Removal of Directors). Importantly, the Board
cannot take any action on its own to remove a director.
Expert Assistance. If the Board feels like it is essential to determine
whether one of its directors, Troung, has engaged in misconduct, and the
Board feels as if it must know this before April/May/June of 2008 (after a
decision on the motion to dismiss), then the Board should hire an expert
now. I was hoping that Proskauer would be able to hire the expert, which
would be paid through Chubb. However, this decision is many months away,
and it looks like Chubb may be denying coverage. Proskauer feels that it
must try to use procedural arguments first, as a way to obtain a dismissal,
in which case an expert would not be needed at all. The hearing on the
motion to dismiss is not scheduled until February, and assuming any
dismissal would be granted with leave to amend, we are looking at many
months before a potential dismissal without leave to amend.
What sort of expert? I feel strongly that the Board should engage a
litigation expert who can not only vet the current “Fake Sam Sloan”
investigative reports, but also a) conduct his own brief investigation and
b) testify at trial if necessary. Dr. Cohen is an ideal candidate. He has
a very strong forensic investigation background, and he is very strong in
the area of SMTP / IP addresses / Usenet. I have used him recently in a
significant spam litigation case in federal court, and, simply stated, he
is head and shoulders above the other expert in terms of experience and
persuasive abilities. Due to his background in technical forensics, he
will be uniquely qualified to comment on the “chain of evidence,” and his
past research and own personal technical projects make him uniquely
qualified to investigate the potential for spoofing or other allegations
that Truong has been “set up.”
All this said, here are some options to consider:

1. Do Nothing. With this option the board lets the NY litigation take
its course, informing its membership that the Board cannot make any
comments on this matter while litigation is pending. US Chess will be
pointing the finger directly at Truong, in the form of a cross action, if
the lawsuit survives the motion to dismiss.
2. Ask Truong Publicly to Step Down. There are two things to use
potentially as leverage after you ask Truong to step down. First, if you
can get Sloan to drop the lawsuit, that would obviously be best; however,
my gut tells me that that will be difficult. Also, if Sloan keeps the
defamation allegations in the lawsuit, the Board may want to cross claim
against Truong, which will be more difficult if he has been dismissed by
Sloan (i.e. the Board would have to add Truong as a party). It sounds like
you have other counsel that has dealt with Sloan before who could contact
Sloan; if he cannot do it, I would be happy to contact Sloan (keep in mind
I will not be back in the office until Jan 10). Second, the board could
threaten to initiate a separate action against Truong, in Illinois, to
remove him from the Board, if Truong does not resign. We could even
provide Truong with a simple draft complaint that we will threaten to file
if he does not step down.
I have provided some comments on your proposed letter in redline format,
attached.
3. Plan to Ask the Court in NY to Remove Truong. Even though a NY court
may be disinclined to take this sort of equitable action (as opposed to an
Illinois court), it would be simple cross-claim to make. Please note that
we have not done the research as to whether this sort of cross claim would
be subject to a motion to dismiss due to it being brought in NY as opposed
to Illinois.
4. File a Separate Action Against Truong in Illinois or Tennessee. With
or without prior notice to Truong, this action would be to remove Truong
because he has "engaged in fraudulent or dishonest conduct or has grossly
abused his position to the detriment of the corporation," and "removal is
in the best interest of the corporation." This is essentially a lawsuit
(the same allegation of the cross claim I described above), with a fairly
simple complaint, asking a judge to remove Truong. Because Sloan would not
be a party, he would not see any of the discovery materials obtained from
ISPs. Also, and perhaps most importantly, Truong may not be in a position
to litigate this matter separately from the NY action, resulting in a very
quick resolution of the matter. I must qualify this option by saying that
we only did limited research on this Illinois statute, and my opinion
regarding the sufficiency of such a suit, and regarding where the suit
could be brought, may change upon further research.
I wish I could provide further guidance to you on the phone before Jan
10, when I return, but I am in a different time zone, and my connectivity
is spotty. I will continue to monitor my email as much as possible this
week before I get back to the office.
Very best regards,
Karl
_________________________________________________
Karl S. Kronenberger
KRONENBERGER BURGOYNE, LLP


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