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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE BRANCH
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Richard Bozulich,
Plaintiff.
No. C-95 20678 RMW
-against-
Date: February 28, 1997
Ishi Press International, James W. Connelley,
Elwyn Berlekamp, Nathaniel Berkowitz,
and Hartland Snyder,
Defendants.
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Ishi Press International, a California Corporation,
Elwyn Berlekamp, Nathaniel Berkowitz,
and Hartland Snyder,
Counter-claimants
-against-
Richard Bozulich, individually, and The Ishi Press,
Inc., a Japanese Corporation, Samuel Sloan aka
Ismail Sloan an individual,
Counter - Defendants.
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Declaration of Samuel Sloan in Reply to Declaration of Steven Miyake in opposition to Motion for Summary Judgment
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I, Samuel Sloan, declare:
1. I make this declaration in reply to declaration of Steven Miyake in opposition to my motion for summary judgment.
2. I am the President of Ishi Press International, a California Corporation. I was first elected president on October 26, 1994, the same date that James W. Connelley was removed as president and director. I was reelected President and Secretary on November 7, 1994 at a meeting of directors which took place immediately after a special meeting of stockholders which took place on November 7, 1994.
3. Although this court has indicated that I might not be the president, the court is simply wrong. The reason given for stating that Richard Bozulich as holder of the outstanding shares did not have the power to remove all the directors as he did on October 26, 1994 was that if the shares would have been voted cumulatively, the minority shareholders, Berkowitz, Berlekamp and Connelley, would have had enough shares to elect one director. However, that only applies if part of the board was removed. Here, the entire board was removed. I enclose the law commentary.
4. The reason given for stating that Richard Bozulich did not have the authority to call a special shareholder's meeting was that only the chairman or the president had that authority. Again, the court is clearly wrong. Even a five percent stockholder can a special meeting of stockholders under California corporate law. I enclose the law text.
5. The declaration by Steven Miyake states that I have been dismissed as a defendant and therefore do not have standing to file a motion for summary judgment. However, Mr. Miyake has merely faxed a statement to the court that I have been dismissed. He has never filed a hard copy. On the court's computer I am still listed as an active defendant. I have checked the local rules and I can find no provision allowing for a fax filing. Also, by the time he faxed his notice to the court I had already been personally served with a summons and complaint and had appeared in the case by attending two depositions. I had to fly from New York on October 29, 1996 to be present for a deposition the next day. Were it not for this case, I would still be in New York, where five of my children reside, and would never have come here. I have gone to considerable time and expense to defend this case. It is too late for Mr. Miyake to dismiss me without prejudice, giving him the right to re-file at any time depending on how the case goes. I have the right to summary judgment on the merits because the allegations against me are entirely frivolous.
6. Mr. Miyake and Mr. Neal state that the reason for dismissing me was that I am in bankruptcy and therefore cannot be sued. Mr. Miyake and Mr. Neal are defrauding this court because they know that this is not true. As I have explained several times to them, I was dismissed in bankruptcy on March 4, 1995, nearly two years ago. Due to a clerical error, on March 11, 1995, I was dismissed again. Since a person cannot be dismissed in bankruptcy but once every seven years, on March 18, 1995, the court corrected the error of one week earlier by vacating the second discharge from bankruptcy. This left the March 4, 1995 discharge intact. I enclose copies of the documents. Mr. Miyake has long been aware of this and, even if he were not aware, a simple telephone call to the clerk's office would have confirmed that I have been discharged in bankruptcy.
7. It addition, Section 1 of the California Corporate Code give the President and the Secretary of a corporation the right to appear in court as the representative of that corporation. I am both the president and the secretary and I clearly have the right to appear. An important point which should not be overlooked is that they do not have a representative. All of the people on their side have resigned. Berlekamp, Berkowitz and Connelley have all resigned. This court in an earlier decision stated that Hartland Snyder was made a director on January 20, 1995. That was an error. Hartland Snyder was made a director of "Ishi Ltd." on that date. Ishi Ltd. is not the California corporation here. Ishi Ltd. is the London (UK) corporation. The cause of this understandable error by this court is that there are five different corporations that I know of (perhaps there are more) with the name Ishi or Ishi Press.
8. Mr. Miyake, in his declaration, quotes Richard Bozulich as saying "I never really appointed [Sloan] as my agent." What is going on here is that Mr. Miyake is trying to say that everything that I did was done as the agent for Bozulich, so that Bozulich will be liable for all my acts. However, the truth is that I am not the agent of Bozulich, most of the time. I am an independent person and tend to do what is in my own interests. In the case presented here, my underlying interest is that I am the author of several books. The defendants/counter-claimants claim that they own the rights to every book ever published by Richard Bozulich. This claim makes it impossible for me or any of the other authors of books published by Bozulich to get our books republished or reprinted. The defendants also refuse to pay any royalties at all on our books which they are selling. I have a judgment for royalties in the amount of $5020 which has been awarded to me by Judge Flaherty of the Santa Clara County Superior Court. The defendants have moved their bank accounts four times in the past year to stop me from collecting that money. Their accounts at Summit Bank, Bank of the West, Bank of America and Union Bank have all been closed. I and their other judgment creditors have to hire search firms to try to track down their assets, only to have them move their bank accounts again. Yet, they have money to pay lawyers to file frivolous motions in this case. The defendants state that they have spent $100,000 on this case and that they are entitled to reimbursement by the corporation and by Richard Bozulich, but they cannot pay me my $5,000 judgment.
9. Around six times, Nathaniel Berkowitz has filed "third party claims" claiming that he is owed money by Ishi Press International and that his debt comes ahead of mine. I have had to appear in Los Gatos Small Claims Court about eight times in response to his frivolous claims. In this way, he has stopped me from collecting the $5020. Otherwise, I would have collected the entire amount in September, 1995. Mr. Berkowitz has filed a multiplicity of in pro per suits, even though he is a wealthy person. I enclose the cover sheet of his suit against the San Francisco Human Rights Commission. Mr. Berkowitz has also been criminally indicted for failure to dispose of hazardous waste in the InFerGene case, even though he denied under oath that he has ever been indicted.
10. Mr. Miyake also states that Mr. Bozulich did not authorize me to file the Statement of Domestic Stock Corporation with the California Secretary of State. Mr. Bozulich knows virtually nothing about California Corporate Law. He lives in Japan. Under the law of California, the president or the secretary of a corporation is obliged to file a Statement of Domestic Stock Corporation once a year. The defendants have filed nothing since 1994. I filed for both 1995 and 1996. I paid the filing fee. Had I not filed, the corporation would have been delinquent and in default. I did not need any authority from Mr. Bozulich in Japan to make this required filing. Mr. Bozulich acknowledged that his board appointed or elected me as the President of Ishi Press International. There is no dispute about that. As the President, I was obliged to file the Statement of Domestic Stock Corporation.
11. As this case winds before the court, we continue to uncover fraudulent acts by the defendants. These were things which we never even suspected. Suffice it to say that virtually everything which these defendants has done has been fraudulent. I have discovered three new frauds within the past week.
1) I re-established contact with an old friend in England and he had a company report done of Ishi Press International (UK) Ltd. Here is what he found:
Name of company: Ishi Press International Ltd.
Date of incorporation: 5th April 1991
Company registration number: 02598730
The company sustained a net loss for the period to 30th June 1992 of 55,375 pounds.
Stuart John Dowsey was company secretary and James William Connelly (970 Plaza Drive, San Jose, CA 95125) was a director. 14,700 shares of 1 pound each were issued of which Dowsey had 1 and Connelly the rest (i.e. Connelly put 14,700 pounds into the company).
Connolly's appointment as director is dated June 25th 1991.
The company was in debt at June 30 1992 but the creditors had agreed to support the company until it could afford to pay (otherwise they could have forced it into liquidation).
On August 5th 1995 the Registrar of Companies gave notice that the Company would be struck off unless cause is shown to the contrary within 3 months. This is standard for companies who have not filed their annual returns. On December 5th 1995 the company was struck off the register (dissolved). So it no longer exists.
12. What is earth shaking about this is that it shows that Ishi Press International Ltd. was never a subsidiary of Ishi Press International (a California Corporation). It shows that Connelley owned all but one share of stock, so Connelley essentially was the personal owner of the company. (Stuart Dowsey was a local person in England whom Connelley apparently needed so that it would not be entirely a foreign owned corporation.) This means that the $40,000 loan by John Torode to Ishi Press International Ltd. was really a personal loan to Mr. Connelley. It also means that the $120,000 in shipments by Richard Bozulich to Ishi Press International Ltd. were really shipments to Connelley personally. Concerning this London fraud, Connelley always had represented that Ishi Press International in San Jose was 100% owner of Ishi Press International, LTD in London. He never said that he owned anything personally.
13. Moreover, a common complaint of both Dowsey and Ray Bathke was that Connelley was always using the assets of Ishi London for his own purposes, and as a result they were never able to build up any money to pay their bills. Suspicions are now developing that Connelley was using these assets for other purposes, to the detriment of the London operation. Richard Bozulich had sent more than $100,000 in merchandise to Ishi London. He had also sent them the equivalent in money and merchandise of 3,000,000 yen from Nob Yoshigahara's initial investment in Ishi Press International. Torode lent the company $40,000. Thus, more than $200,000 of money that went into Ishi London, yet they ended up with a huge debt. Dowsey also got ripped of by Connelley and has complained bitterly about it.
14. I have uncovered more fraud as well. I have been able to obtain documents from Summit Bank. These documents show why Summit Bank loaned money to Ishi Press International. The financial statements created and provided Connelley invariably show the corporation making a significant profit. In reality, the corporation always had a loss.
15. Here is a footnote to the financial statement dated June 30, 1993:
"3. Notes to shareholders includes $120,000 in loans payable to Elwyn Berlekamp and $107,477 payable to The Ishi Press, Inc. Both of these are expected to be converted into stock upon completion of our current round of financing."
16. In reality, Richard Bozulich had no intention of converting this into stock. He had mortgaged his house in Japan in order to be able to make these loans. He was expecting to be repaid. He has very recently lost that house and is being required to move out within the next few days. In the balance sheet for June 30, 1993, there are the following items:
Accounts Payable Ishi Press Japan $35,539.01
Convertible Notes $14,481.28
Notes to Shareholders $227,477.00
Profit (loss) for Period $34,808.97
17. The above item of $14,481.28 was actually the $42,868 note. The $107,477 was the three other loans which Bozulich had made. Therefore, the entire debt to Bozulich reflected in this balance sheet was roughly $184,000.
18. The next balance sheet, which was dated September 30, 1993, shows that the $14,481.28 item has been simply dropped. The profit for the period is $2,171.08 and notes to shareholders is down to $126,958.28. Yet no significant money had been paid to Richard Bozulich during the intervening period. What this means is that Connelley simply dropped these items off of the balance sheet in order to generate false profits.
19. Finally, there is yet another fraud which has recently been uncovered in that Mr. Miyake pursuant to discovery last week provided a hand written memo by Hartland Snyder of the November 10, 1994 meeting. The fax markings show that this was faxed from Berkowitz to Neal in April, 1995, at the time when Neal first came on this case. This seven page memo shows things happening at the meeting which are vastly different from what Hartland's "minutes" state. Here are some of the items:
a) Trade Debt of Ishi (UK) to Japan was $91,000 as of January 1, 1994 and of The Connelley Group to Ishi (Japan) was $99,000 as of November 93.
b) Reorganize Ishi Intl. as Ishi Inc. within 90 days.
c) Ishi Press Japan will continue as a publisher of go books/magazines & promotional literature on go and other games.
d) Ishi Inc. will have the right of first refusal on the distribution of Ishi Press products in N. America, S. America, EC but not in Far East and Australia.
e) Intercompany debts will be settled now.
f) Guarantee no trouble w/ Sloan
20. Now it can be understood why Bozulich signed certain things at that time. The actual deal was that Bozulich would be repaid about $190,000 plus his $42,868 note (which was also covered). Naturally, he was happy to make this deal. However, the defendants reneged. They only paid him $1500 and that money apparently came from Lowenstein. This lawsuit followed.
WHEREFORE, for all of the reasons set forth above, this motion for summary judgment should be granted.
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Samuel H. Sloan
VERIFICATION
I, Samuel Sloan, have read the foregoing declaration and know the contents thereof. The same is true of my own knowledge, except as to those matters which are stated upon information and belief, and, as to those matters, I believe them to be true. I declare under penalty of perjury under the laws of California that the foregoing is true and correct.
February 13, 1997
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Samuel H. Sloan