THE BOSTON SUNDAY GLOBE FEBRUARY 21,1999
STEPHEN S. GRAY
125 West Street
Hyde Park, MA 02136
Phone/Fax (617) 364-4010
April 2, 1998
Bruce T. Eisenhut, Esq.
Assistant Bar Counsel
Office of the Bar Counsel
75 Federal Street
Boston, MA 02110
Re: BBO File No's. B1-97-723B(Murphy & Farrell), B1-97-(9) 446(B) (Murphy & Farrell)
Dear Mr. Eisenhut:
This letter is in response to Harold Murphy's December 18, 1997 letter. Please forgive the delay in this response.
First, I am appreciative that you are willing to reexamine the facts of this case. As you may recall, on July 15, 1997, I filed my initial complaint against Attorneys Harold Murphy and Donald Farrell of the law firm Hanify & King, arising out of their representation of my company, V&M Management, Inc., in Chapter 11 bankruptcy proceedings, Case No. 96-10123-CJK. In that complaint, I illustrated the wrongdoing and misrepresentations committed by Harold Murphy and Hanify & King.
On September 24, 1997 you notified me that you were closing the case against Attorneys Murphy and Farrell.
On November 12, 1997, I wrote Mr. Rosenfield that new allegations of a conflict of interest were discovered against Murphy and Farrell, and I enclosed a copy of a Motion filed by nine creditors in the V&M Bankruptcy case.
In his December 18, 1997 response, Murphy states "I explicitly informed Mr. Mourad of the fact that I represented Mr. Gray in his capacity as trustee in other cases and that I had worked often with Mr. Gray during the past several years. Mr. Mourad indicated to me that he had no objection to Mr. Gray's appointment nor any objection to our continued representation under such circumstances." These statements are completely false. Never, at any time, did I consent to Stephen Gray's appointment as Chapter 11 Trustee of V&M. I would not have battled against Gray in the Bankruptcy Court for two years if I had not objected to his appointment. Also, never, at any time, did Harold Murphy notify me, through written or oral communication, that he had ever represented Gray in the past. Also, Murphy never notified me that he was simultaneously representing Gray in another bankruptcy case while representing V&M Management, Inc. Not only did Murphy never make any such disclosures to me; his December 18, 1997 response to this Board is a lie.
What Murphy told me at our initial January 1996 consultations, after the January 8, 1996 filing and assignment of the case to Judge Kenner, was that Murphy was a personal friend of Judge Kenner, was a former clerk of the Bankruptcy Court, had personal and frequent phone contact with Judge Kenner, and that hiring him (Murphy) would give V&M an "inside track" or edge with Judge Kenner.
Murphy also made it very clear to me that if I ever took any public action against Judge Kenner, through the media, demonstrations or otherwise, that he would resign from the case, as he (Murphy) and his firm did about a third of their business in front of Judge Kenner.
I only came to know about the relationship between Murphy and Gray for the first time when attorney David M. Lipton informed me in October of 1997 that Murphy had been representing Gray in the case of In re: American Shipyard Corporation, Case No.11-96-11753, in the Rhode Island Bankruptcy Court. My nephew went to the Rhode Island Bankruptcy Court to look up the American Shipyard case. Sure enough, Stephen Gray's June 14, 1996 application to employ Harold Murphy was granted on July 15, 1996, while Murphy was still the counsel of record for V&M Management, and after Gray had been appointed as Chapter 11 Trustee to V&M, on April 2, 1996. Attorney Lipton's October 30, 1997 Affidavit is attached as Exhibit "1." The June 14, 1996 Application of Chapter 11 Trustee For Employment of Counsel, June 14, 1996 Affidavit of Harold Murphy In Support of Motion For Employment, and the July 15, 1996 Order Granting Trustee's Application To Employ Counsel, are attached as Exhibits "2, 3, & 4."
In light of this new evidence, I had my nephew go to the Bankruptcy Court in Boston to see if Murphy had represented Gray in any other cases. He found that Harold Murphy and Hanify & King represented Stephen Gray, in his capacity as Chapter 7 Trustee, in the case of In re: Neponset River Paper Company f/k/a, Patriot Paper Corporation, Case No. 93-12482-CJK. This case was pending before the same Bankruptcy Judge, Carol J. Kenner, who appointed Gray as the Trustee for V&M. Therefore, she (Judge Kenner) must have known of the prior Murphy representation of Gray at the same time she (Kenner) appointed Gray. This case had been ongoing before I hired Harold Murphy to represent V&M in January of 1996, and Murphy proceeded to represent Gray in the Patriot Paper case and V&M simultaneously, in the same court room, and in front of the same Judge (Carol J. Kenner), without notifying me of his relationship with Gray. Stephen Gray's May 20, 1994 Application For Employment of Counsel is attached as exhibit "5" and Murphy's May 20, 1994 Affidavit in Support of Application For Employment in the Patriot Paper Corp. case are attached as Exhibit "6."
After Attorney Murphy refused my request to appeal the April 2, 1996 appointment of Stephen Gray as Trustee to V&M, and had his firm draft a Notice of Appeal for me to sign pro se, Murphy filed, on April 11, 1996, "the Statement of Trustee Respecting Motion For Relief From Automatic Stay," on behalf of Gray in the Patriot Paper case, attached as Exhibit "7,". This was only nine days after Gray had been appointed Trustee for V&M, and it was still within the allotted time period to file a notice of appeal for V&M (which Murphy declined to do).
In his December 18, 1997 response to my complaint, Murphy states "Hanify & King has represented Mr. Gray in other matters only in his representative capacity as a bankruptcy trustee. There are no differing interests implicated in such representations." I strongly disagree with this statement. There is a severe and painfully obvious conflict surrounding the circumstances in this case, which has completely tainted the V&M bankruptcy proceeding. Murphy was hired by V&M to prevent the appointment of a Trustee, but he did not do that. In fact, he refused to object and refused to appeal after finding out that Gray was appointed as Trustee. As the sole stockholder of V&M, I was stripped of my assets, my livelihood, and 15 years of investment as a result of Murphy's actions, allowing his client in other cases, Stephen Gray, to be appointed V&M's Trustee, without an appeal, challenge or honest disclosure of the conflict.
As part of the Trustee appointment process, Gray was required to make certain disclosures, Bankruptcy Rule 2007.1. Gray submitted an April 5, 1996 Verified Statement and an April 10, 1996 Amended Verified Statement, that he (Gray) had no connection to V&M or V&M's attorneys. Gray's verified statements are obviously false and perjurious, but only Murphy knew that, and he failed to disclose the Murphy-Gray connection and prior representation, or to object to Gray's appointment. Gray's Verified Statements are attached as Exhibit "8."
In the case of In re Carlton House of Brockton, Inc. & Paula Wyner, case No.'s 93-21122-CJK and 93-21123-CJK, Judge Kenner suspended Attorney Neal E. Satran for failing to disclose adverse interests. Judge Kenner found that "despite his knowledge of these adverse interests Satron had not disclosed them in the affidavit he submitted pursuant to F.R. Banr.P. 2014 (a) in support of the Committee's application for his employment. Rather, he had averred that he was disinterested and that he represented no interest materially adverse to the estate." In the case of V&M Management, Inc., perjury was committed upon the Court to conceal the adverse interest and conflicting relationship between Gray and Murphy. This is far more unethical. Judge Kenner's February 20, 1996 Memorandum of decision is attached as Exhibit "9."
There is no longer a need for this office to await the outcome of the creditors' appeal of the Bankruptcy Court's order denying their Motion to Stay the confirmed reorganization plan. In their Notice of Withdrawal of Appeal, attached as Exhibit "10," "The Plaintiff/ Bankruptcy appellants note that the withdrawal and/or dismissal of their appeal on mootness grounds is not a decision on the merits." When the stay was denied by the U.S. District Court, Trustee Gray deeded the property to Beacon Residential Properties Limited Partnership, and the appeal became moot, and the creditors withdrew and dismissed their appeal.
Bankruptcy specialist, attorney Leonard M. Krulewich, of Krulewich & Associates, has offered the true nature of the misrepresentation, showing the unlawful negligence committed by Harold Murphy in his own sworn March 2, 1998 Affidavit. Attorney Krulewich has studied this case for over a year, and found there to be "so many errors in the Court's findings based upon objectionable evidence that, not only would the District Court have reversed the decision, but there would have been a possibility the District Court would have retained the case and revoked the transfer to the Bankruptcy Court. The failure to take the appeal and the suggestion that Mr. Mourad prosecute the appeal pro se, amounts, in my opinion, to negligence." Attorney Krulewich also goes on to say "To recommend that Mr. Mourad not file a proof of claim, especially after counsel failed to take an appeal, is grossly negligent and amounts, almost to an intent to deprive a client of his rights." Attorney Krulewich's Affidavit is attached as Exhibit "11."
I would ask that you complete your independent investigation of this renewed complaint and find that the serious ethical misconduct and undisclosed conflict of interests warrants disciplinary action against Attorneys Murphy and Farrell.
If you have any questions, feel free to call me at the number above. Thank you for you patience, professionalism and pursuit of the truth.
OFFICE OF THE BAR COUNSEL
BOARD OF BAR OVERSEERS OF THE SUPREME JUDICIAL COURT 75 FEDERAL STREET BOSTON, MASSACHUSETTS 02110
617/728-8750 Fax: 617/357-1866
ASSISTANT BAR COUNSEI TERENCE M. TROYER ANNE S. J. KAUFMAN SUSAN STRAUSS WEISBERG ALICE L. HAGEMAN ROGER GELLER
BRUCE T. ElSENHLT CATHLEEN C. CAVELL
ELLEN M. MEAGHER ROBERT I. WARNER JANE R. RABE
YVONNE P. TOYLOY
LINDA G. BAL'ER JOHN W. MARSHALL
FIRST ASSISTANT BAR COUNSEL CONSTANCE V. VECCHIONE NANCY E. KALTMAN
July 27, 1998
Mr. Alphonse Mourad 125 West Street HydePark,MA 02136
RE: BBO File NofsV C1-97-723B (Harold B. Murphy, Esq.;> Dear Mr. Mourad:
I have reviewed and investigated your allegations of misconduct regarding Attorney Harold B. Murphy.
Your allegation that Attorney Murphy did not disclose to you that his firm represented Mr. Gray in other prior or pending matters cannot be substantiated with the degree and certainty of evidence necessary for successful prosecution. It does appear that trustee Gray filed two false, or at least grossly inaccurate, disclosure statements with the Bankruptcy Court. However, after exhaustive review, we have been unable to prove that either Choate, Hall and Stewart or Hanify and King had prior knowledge of, or participated in the falsity of the two filings.
In dismissing this file, we express no opinion as to any civil liability that Attorney Murphy or trustee Gray may have and the file may be reopened if any other agency finds any professional misconduct.
The matter is now concluded, and no further proceedings will be instituted by this office. This decision has been reviewed by a member of the Board of Bar Overseers, who concurs in the dismissal.
BruceT. Eisenhut Assistant Bar Counsel
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
V & M MANAGEMENT. INC. CHAPTER 11
CASE NO. 96-101233-CJK
VERIFIED STATEMENT OF STEPHEN S. GRAY
In accordance with Rule 2007.1 of the Federal Rules of Bankruptcy Procedure. I. Stephen S. Gray. hereby verify and state as follows:
1. On April 2,1996. this court entered an Order allowing my appointment as Chapter 11 Trustee of the above Debtor.
2. The undersigned has consulted with the United States Trustee, the Court* appointed examiner, counsel to the Debtor and certain creditors of the above Debtor, and the Debtor and reviewed the Debtor's schedules and statement of affairs and other papers filed in connection with this case. Based upon a review of these papers and discussions with the aforementioned parties, the undersigned does not have any connections with the Debtor, creditors, any party in interest, their respective attorneys, the United States Trustee or any person employed in the Office of the United States Trustee. The undersigned submits and so states that he is a "disinterested person" in this case.
Signed under penattes of perjury this 5th day of Apri 1996.
STEPHEN S. GRAY
The Recovery Group
270 Congress Street
Boston, MA 02210
UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division)
Chapter 11 V & M MANAGEMENT, INC.,
Case NO.; 96-10123-CJK
AMENDED VERIFIED STATEMENT OF STEPHEN S. GRAY
In accordance with Rule 2007.1 of the Federal Rules of Bankruptcy Procedure, I, Stephen S. Sray. hereby verify and state as follows:
1. On April 2, 1996, this Court enccsred an order allowing my appointment ae Chapter 11 Trustee of V&M Management, Inc., the Debtor in this chapter 11 case (the "Debtor").
2. I have moved this Court for the entry of an order authorizing the employment of Choate, Hall 6 Stewart ("CH&S") and Paul D. Moore, P.O., of chat finn as my counsel in this matter. I am filing this Amended Verified Statement solely to disclose my connections with Mr. Moore.
3. I have consulted with the United Statej Trustee, counsel to the Debtor, the Examiner appointed by this Court and certain creditors of the Debtor. In addition. I have reviewed the Debtor's schedules and statement o; affairs and certain other papers filed in connection with this case. Based upon my consultations with the aforementioned parties and my review of the papers noted above, to the best of my knowledge, I do not have any connections with the Debtor, its creditors, any other party in interest, their respective attorneys and accountants,
the United State Trustee, or any person employed in the office of the united States Trustee except that:
- Paul D. Moore serves as counsel to me in my capacity as the Chapter 7 Trustee of TLX Communications, Inc. (Case No. 95-15916-JNF) and of C1M Communications, Inc. (Case No. 95-15917-JNF);
- Paul D. Moore serves as counsel to me in my capacity as the Chapter 11 Trustee of William T. Bates d/b/a New England Physical Therapy and Sports Medicine (Case No. 94-13S96-CJK;
- Paul 0. Moore serves as counsel to me in my capacity as the Chapter 7 Trustee of Fidelity Guaranty Mortgage Corparation (Case No. 92-20375-WCH);
- Paul 0. Moore serves as counsel to me in my capacity as the Chapter 7 Trustee of Northeast Building Corporation (Case No. 91-16758-WCH); and
- Paul D. Moore serves as Debtor's counsel in several matters in which The Recovery Group and roe serve as Turnaround Consultant or as Disbursing Agent.
4. 1 hereby represent that I am a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code.
Executed this 10 day of April, 1996 under the laws of the United States of America.
Stephen S. Gray
The Recovery Group
270 Congress Street
Boston, MA 02210
While serving as Chapter 11 Trustee of V&M Management, Inc. Stephen Gray was also appointed as Trustee in the case of In re American Shipyard Corporation (Case No. 11-96-11753), in the Rhode Island Bankruptcy District. Mr. Gray, shortly after his appointment in the Rhode Island case, petitioned that Court to hire Harold Murphy as his attorney. (See Exhibit A, Stephen Gray's Motion). Neither Gray nor Murphy disclosed this employment relationship to the Court in the V&M case, even after filing affidavits to the court stating that they had no affiliation!!. (Illegal conflict of interest, Judge Kenner knew this conflict of interest representing both offending parties at the same time and still aloud the proceeding!!).
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
In re Chapter 7Case No. 93-12482-CJK NEPONSET RIVER PAPER COMPANY
f/k/a PATRIOT PAPER CORPORATION,
STATEMENT OF TRUSTEE RESPECTING MOTION FOR RELIEF FROM AUTOMATIC STAY
Now comes Stephen S. Gray, Chapter 7 Trustee of the above-entitled Debtor (the "Trustee"), by his attorneys, and respectfully states that he has no opposition to the Motion For Relief From Automatic Stay Where Recovery Is Limited To Debtor"s Insurance Policy with respect to Frederick E. Sheerer v. Consolidated Rail Corporation. Civil Action No. 95-12682RGS, pending before the U.S. District Court for Massachusetts provided that any recovery is limited to the extent of applicable insurance coverage and no appearance or participation by Trusteed counsel in the matter shall be required.
Stephen S. Gray,
Chapter 7 Trustee
Certified to be a true and
correct copy of the original. attorneys,
James M. Lynch, Clerk
U.S. Bankruptcy Court
United States Bankruptcy Court
District of Massachusetts
PATRIOT PAPER COMPANY,
Case No. 93-12482-CJK
ORDER ON LYDONS' MOTION FOR RELIEF FROM STAY
Patrick Lydon, Eileen Lydon, Julia Lydon, and Patric Lydon, Jr., have moved for relief from the automatic stay to prosecute a personal-injury tort action against the Debtor in order to recover under applicable insurance coverage, not fror the Debtor or its bankruptcy estate. The motion is hereby ALLOWED as follows: the movants are granted relief from the automatic stay to prosecute their claims against the Debtor, 1 only on the conditions set forth in In re Catania, 94 B.R. 25( 253 (Bankr.D.Mase. 1989).
Date: March 20 1995
cc: Robert E. Daidone, Esq., for Movants Daniel C. Cohn, Esq., for Debtor Harold B. Murphy, Esq., for Chapter 7 Trustee
UNITED STATES BANKRUPTCY COURT
DISTRICT OF RHODE ISLAND
AMERICAN SHIPYARD CORPORATION
Case No. 11-96-11753
AFFIDAVIT OF HAROLD B. MURPHY
IN SUPPORT OF MOTION FOR EMPLOYMENT AS COUNSEL TO'TRUSTEE AND MOTION FOR ADMISSION PRO HAC VICE
TO THE HONORABLE ARTHUR N. VOTOLATO, BANKRUPTCY JUDGE:
Harold B. Murphy, being duly sworn, deposes and says:
1. I am a shareholder in the law firm of Hanify & King, Professional Corporation, located at One Federal' Street, Boston, MA 02110. I make this Affidavit in pursuant to Section 327 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy'Procedure .which require that counsel to the Trustee represent, to the best o:f their knowledge, no interest adverse to the estate concerning matters upon which they are to be engaged. I also make this Affidavit in support of my admission pro hac vice.
2. I am generally familiar with the business of my law firm and have made inquiry concerning the facts set forth herein prior to making this Affidavit.
3. To the best of my knowledge, neither I nor my law firm represent any interest adverse to the estate. .
4. My law firm and I are disinterested persons within the
meaning of Section 101(13) of the Bankruptcy Code. Susan M. Thurston
. 5. Any compensation, fee or allowance which may be claimed by me or my law firm will belong wholly to the law firm and will not be divided, shared or pooled, directly or indirectly, with any other person or firm.
6. I am, and have been since 1981, a member in good standing of the bar of the state of Massachusetts. In addition, I am admitted to practice before the United States District Court for the District of Massachusetts and the United States Court of Appeals For The First Circuit. Finally, I am a member of the U.S. Panel of Trustees for the District of Massachusetts.
7. There are no disciplinary matters pending against me in any jurisdiction or before any court in which I am, or ever have been, admitted to practice.
8. Neither me or any member of my firm has been admitted to appear pro hac vice before this Court within the last year.
Signed this 12th day of June 1996 under the pains and penalties of perjury.
Harold B: Murphy
UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (EASTERN DIVISION)
V&M MANAGEMENT, INC. Chapter 11
Case No. 96-10123-CJK Debtor
AFFIDAVIT OF DAVID M. LIPTON
David M . Lipton, being duly sworn deposes and says:
1. I am an attorney duly admitted to practice law in the Commonwealth of Massachusetts. I have an office at 15 Court Square, Suite 425, Boston, MA 02108. My Board o Bar Overseers registration number is 301600.
2. In early September of 1997 I was engaged by Alphonse Mourad to review certau aspects of the proceedings in the above captioned matter and to advise regarding them.
3. I first met Mr. Mourad through an attorney who shares space in my office and wh< had had discussions with certain tenants of the Mandela development, owned by the Debtor, ani through former State Senator William Owens who I have known for many years.
4. On October 23, 1997, the attorney through whom I was first introduced to Mr Mourad, returned to the office after having gone to observe a proceeding in the United State Bankruptcy Court for the District of Rhode Island. The case that he was interested in was the cas of American Shipyard Corporation, Chapter 11, docket number 96-11753 ANV. In discussing the case he reported to me that Stephen Gray of the Recovery Group was the Trustee in Bankruptcy in
the American Shipyard case and that his attorney was Harold Murphy of the Boston law firm of Haniiy & King. I recall asking him how long Mr. Murphy had represented Mr. Gray and he responded that so far as he knew from the outset.
5. I asked him if he knew how long the American Shipyard case had been pending and he replied that he did not know specifically but thought that it had been pending for well over a year.
6. Based upon my familiarity with the above captioned matter and having had some discussions with Mr. Mourad regarding the representation ofV&M by Mr. Murphy, I thought that these facts might be significant. I called Mr. Mourad. told him that I thought that I had some information that he was entitled to have and that I was duty bound to report. I asked him if it were alright with him if I reported the information to him through an email directed to his nephew. Mr. Mourad authorized me to report by email and I did so.
7. I suggested, in the email that he or someone on his behalf should go to the Rhode Island Court to determine the dates when the American Shipyard case was filed, when Mr. Gray sought leave to retain counsel, when that motion was allowed and whether Mr. Murphy was counsel to Mr. Gray during the same time period that he was representing V & M Management.
Signed under the penalties of perjury this 30th day, of October 1997..
David M Lipton
15 Court Square, Suite 425
Boston, MA 02108