C. Boies-Schiller’s Disclosure of My Confidential Information to Trans World Entertainment
20. Over the next several months, Trans World Entertainment, Robert Higgins and I did in fact work together, in a series of meetings at the Trans World Entertainment offices and during a trip to Chicago to consult with the firm Diamond Cluster, by sharing control and expenses in our common interest according to the terms that I had promised Robert Higgins I would consent to, through my meeting with Bill Duker.
21. However, during my work with Trans World Entertainment, I soon discovered that the payments that Trans World Entertainment’s vendors made to “special purpose” entities such as Media Logic far exceeded any measurable fair value that the vendors received in return. Instead, I learned, these excessive payments were an indirect or “off-balance sheet” source of available cash flow for Trans World Entertainment, and equaled Trans World Entertainment’s $70 million in profit in the year 2000.
22. I also learned that Trans World Entertainment’s music and movie vendors profited from the scheme by using the payments as kickbacks to coerce Trans World Entertainment to manipulate and inflate reporting of the vendors’ revenue and profit.
23. Attached hereto as Exhibit 50 is a true and correct copy of my Civil RICO Statement filed in the Northern District of New York in Case No. 1:05-cv-205, which on information and belief accurately describes, for example, at 4 – 52, the use of undisclosed kickbacks paid to Trans World Entertainment by its music and movie vendors in return for Trans World Entertainment inflating revenue and profits of its music and movie vendors.
24. Finally, I learned that recent changes in the marketplace, including changes to accounting regulations to control off-balance sheet transactions, made the kickback schemes on which Trans World Entertainment depended more difficult to conceal. Without the off-balance sheet kickbacks, Trans World Entertainment would be insolvent.
25. In response to the pending fiscal crisis, Robert Higgins promised me that he was dedicated to reforming the business practices of the industry. The plan we worked on included challenging the entrenched conspiracy of music and movie vendors by supporting a new distributor organized by the artist named Seal, and by utilizing my proprietary Aimster method as an “honest broker” to harness the potential of the Internet.
26. Relying on Robert Higgins’ promise of reform, I continued working with Trans World Entertainment toward what I believed was our common interest.
27. Once Boies-Schiller commenced representing me in November 2000, I expected that I could trust Boies-Schiller to preserve confidential information I provided to them as my lawyers, while they negotiated a more formal agreement with Trans World Entertainment and its agent Bill Duker, including a securities transaction with Trans World Entertainment.
28. Boies-Schiller in turn led me to believe I could trust Trans World Entertainment and its agent Bill Duker. In his November 15 letter to me, David Boies had referred to my “working together” with Bill Duker, and in our December 13 meeting David Boies had told me in person that he had known Bill Duker for many years to be a trustworthy lawyer.
29. Attached hereto as Exhibit 3 is a true and correct copy of pages 20-21 from a recent book written by David Boies, “Courting Justice,” which on page 21 lauds Bill Duker as a lawyer working at the direction of David Boies in 1982 for his role “to convince [witnesses] to say in court what they had said in interviews.” David Boies concludes that this work was a “remarkable accomplishment.”
30. In my December 13 meeting with David Boies, which Bill Duker attended, and continuing on regular occasions over the next several years, I saw and heard Bill Duker gain access to Boies-Schiller offices and meetings in Albany, New York, in order to obtain confidential information about my proprietary Aimster method that I provided to Boies-Schiller under attorney-client privilege.
31. Several times, I saw and heard Bill Duker say that he was calling David Boies, but at the start of the call ask only, “Is he there?” Without any further identification, Bill Duker would, on information and belief, be given to converse with David Boies, and, upon concluding such conversation, evidently come into possession of my confidential information, including confidential information I had provided to David Boies, and legal opinions that David Boies provided to me.
32. I also saw and heard Boies-Schiller disclose my confidential information to Bill Duker in its offices, meetings and telephone calls, but fail to monitor whether Bill Duker preserved or destroyed such information, or whether such confidential information was used to Bill Duker’s personal advantage.
33. I did not consent to any waiver of confidentiality by Boies-Schiller.
34. Rather, I expected that Boies-Schiller would ensure that my proprietary information was protected by confidentiality agreements or attorney-client privilege.
35. However, on information and belief, Boies-Schiller failed to require such confidentiality agreements of Trans World Entertainment or Bill Duker.
36. In fact, Boies-Schiller and David Boies failed altogether to disclose to me that Bill Duker had been suspended or disbarred from the practice of law in 1997 when Bill Duker pled guilty to charges that he, through his law firm, Duker and Barrett, defrauded the FDIC and RTC of $1.4 million in overbillings.
37. Attached hereto as Exhibit 4 is a true and correct copy of a press release from the FDIC entitled, “Lawyer pleads guilty to overbilling FDIC” identifying a certain William F. Duker, who on information and belief is the same person as Bill Duker.