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MICHELLE L. RICE, SBN 235189

KORY & RICE. LLP
9300 Wilshire Blvd., Suite 200
Beverly Hills, California 90212

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Telephone: (3 10) 285- 1 630

Facsimile: (31 0) 278-7641
JEFFREY KORN, SBN 150978
714 West Olympic Boulevard. Suite 450
Los Angeles, Cdlifomia 90015

Telephone: (3 l0) 430-568 I

Em ail : j effkom I aw@live.com

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Attorneys for Pl aintiffs

LEONARD N. COHEN and
LEONARD COFIEN I]VVESTMENTS, LLC

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SUPERIOR COURT OF THE STATE OF CALTFORNIA

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FOR THB COUNTY OF LOS AI{GELES

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CENTRAL DISTRICT

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LEONARD NORMAN COI-IEN, an

individual, LEONARD COI{EN
IIVVESTMENTS, LLC, a Delaware
Limited Liability Company,
Plaintiffs,

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Hon. Robert L, Hess, Dept.24

OF ROBERT B. KORY

PLAINTIFFS'
DEFENDANT KELLEY
DN TO VACATE
DEFAULT
D MAY 15,2006
)

V.

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Case No. BC 338322

KELLEY A. LYNICH, an individual,

RICHARD A. WESTIN, ESQ. an
individual, DOES I through 50,
inclusive,
Defendants.

Complaint Filed: August 15 ,2005

Hearing Date:
January 17,2014

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I, ROBERT B. KORY, declare as follows:

1.

I am a resident of Los Angeles, and am over the age of eighteen. The following

facts are within my personal knowledge, and, if called and sworn as a witness, I could and would

testifu competently thereto.

2.

Since

January 2011,I have been partner in the firm of Kory & Rice, LLp.

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I am an attorney in good standing admitted to practice law in California.

From January I 993 to December 2010, I practiced law in California under the

name The Law Offices of Robert B. Kory.

4.

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Since November 2004,I have represented Leonard Cohen in corporate and tax

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matters, including communications with the federal, state and international tax authorities. I

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currently serye as Mr. Cohen's general corporate counsel and oversee all of Mr. Cohen's general

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business affairs matters, including but not limited to taxes.

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I began representing Mr. Cohen in

a dispute

with his former personal manager,

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Kelley Lynch, regarding her misappropriation of funds from his various personal and retirement

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accounts. I also represented him in a related dispute with his former lawyer, Richard Westin, Esq.

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and his former financial adviser, Neal Greenberg, regarding their roles in enabling Ms. Lynch in

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her wrongdoing. Mr. Westin and Mr. Greenberg created an estate plan for Mr. Cohen that gave

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Ms. Lynch unfettered control over Mr. Cohen's accounts.

6.

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During the course of my representation, I learned that Mr. Cohen had been advised

first to sell his song copyrights and later to sell his royalty interest in record albums
estate

plan. He sold his song copyrights in 1996

as

parl of his

and contributed the bulk of the sale proceeds to a

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family trust. He sold his record album royalties in2O0l, and the bulk of the sale proceeds were

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placed in a company called Traditional Holdings, LLC that was established to provide long term

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annuity income to Mr. Cohen during his life with the corpus, if any remaining on his death, going

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to his two children. He contributed his writer's royalties to LC Investments, LLC in 2000 with a

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view toward the eventual sale of LC Investments, Inc. in2005, a sale which was cancelled upon

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independent review of Mr. Cohen's entire estateglan.

DECLARATION OF ROBERT B. KORY, ESQ, IN SUPPORT OF PLAINTIFFS'OPPOSITION
TO DEFENDANT KELLEY LYNCH'S
MOTION TO VACATE AND/OR MODIFY DEFAULT JUDGMENT ENTERED
MAY 15,2006

7.

The business purpose as to all these transactions was to caprtalize a future royalty

stream and remove the risk related to the health of the music industry and a potential decline in

I\{r. Cohen's popularity through

valuation of that royalty stream, and to create instead a substantial pool of capital that could fund

Mr. Cohen's retirement without regard to the health of the music industry or Mr. Cohen's

popularity. This estate planning strategy emerged in the 1990s to meet the needs of aging stars in

the music business. Mr. Greenberg and Mr. Westin developed an innovative application of a well-

accepted estate planning tool, the private annuity, in the record album royalty sale transaction.

8.

a current sale

of a future royalty stream based on a then current

On review of these transactions, I questioned their propriety for two principal

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reasons. First, the transactions seemed to involve excessive fees. In the sale of the record album

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royalties, Traditional Holdings, LLC sold the record album royalties for $8 million, but paid over

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$3.3 million in third parly professional fees including, over $1 million to Ms. Lynch, and netted

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only $4.7 million in capital to fund Mr. Cohen's retirement owned by Traditional Holdings, LLC.

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Second, the transactions created a pool of funds managed exclusively by Greenberg as an

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investment manager, but under the control of Lynch, with few if any checks and balances.

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9.

Mr. Cohen engaged me in November 2004 in part because he suspected that

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Traditional Holdings, LLC, which he believed (based on monthly emails from Greenberg) had

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over $5 million in stocks and bonds under Greenberg's management, might in fact have

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substantially less in real assets because Ms. Lynch had directed Greenberg to sell the stocks and

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bonds held by Traditional Holdings,

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Holdings, LLC without Mr. Cohen's knowledge or consent. Early review of Mr. Cohen's

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accounts also indicated that Ms. Lynch might have misappropriated funds from other of Mr.

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Cohen's accounts over which she then had control. Claims against Ms. Lynch and Mr. Westin

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ultimately led to the preparation by my then associate (and now partner) Michelle Rice, Esq. of

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Mr. Cohen's and LC Investments, LLC civil complaint against Kelley Lynch and Richard Westin

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(eventually filed by Scott Edelman of Gibson Dunn & Crutcher, LLP on August 15, 2005) (the

27

"Complaint") in the instant case seeking monetary damages

LLC

so that she could borrow funds

as

from Traditional

well as an injunction and

28
DECLARATION OF ROBERT B. KORY, ESQ, TN SUPPORT OF PLAINTIFFS'
OPPOSITION TO DEFENDANT KELLEY LYNCH'S
MOTION TO VACATE AND/OR MODIFY DEFAULT JUDGMENT ENTERED MAY 15.2006

I
)

constructive trust over those entities established for Mr. Cohen's benefrt but effectivelv controlled
by Ms. Lynch.

10.

In 2005, I engaged on Mr. Cohen's behalf, the accounting firm, Moss Adams, and

specifically the head of the forensic accounting practice atthat firm, Kevin Prins, to review all of

Mr. Cohen's accounts that were under Ms. Lynch's control from 1998 to 2004. I advised Mr.

Prins that Ms. Lynch as Mr. Cohen's manager, was entitledto l5oA of annual gross revenues to

Mr. Cohen from publishing/writer royalties, record album royalties and personal appearances. Mr.

Prins concluded that Ms. Lynch was entitled to $389,258 in writer royalties during that period but

had paid herself $1,248,871, an excess of $859,61

3. He also concluded that she had been properly

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paid based on her 15oh management fee, the sum of $1,001,250 from the sale of the artist royalties

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by Traditional Holdings, LLC, but that she had then borrowed another $3,041,000 on her own

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authority from Traditional Holdings, LLC. Mr. Prins also reported that Ms. Lynch had paid

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herself $304,500 from the Cohen Family Trust, when those funds were no longer subject to her

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l5o/o fee, and she paid herself 92,414,238 from

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basis for such payments. He also noted that Ms. Lynch had deposited in excess of $200,000 in

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checks payable to

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Ms. Lynch had misappropriated $7,159,413 of funds belonging to Mr. Cohen over a six year

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period. (See Exh. A

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1.

Mr. Cohen's personal checking account with no

Mr. Cohen directly into her own account. In short, Mr. Prins concluded that

In 2005, I also engaged on Mr, Cohen's behalf, the tax accounting firm, Michael

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Mesnick & company ("Mesnick"), to review the tax consequences of Ms. Lynch's

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misappropriation of funds from Mr. Cohen's various legal entities. Under my personal

,,)

supervision and subject to my review, Mr. Mesnick has since prepared tax retums for Mr. Cohen

23

and his affiliated entities for the calendar year 2005 and every year thereafter. As part of the tax

24

research related to the Complaint,

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funds misappropriated by Ms. Lynch from 1998 to 2004 as a "theft loss" on Mr. Cohen's 2005

26

federal and state income tax returns. Although Mr. Cohen first reported a problem with Ms.

)1

Lynch in late October 2004, notably missing funds from one checking account, neither Mr. Cohen,

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nor Mr. Prins, nor I were able to confirm conclus{vely the nature and magnitude of the loss until

I concluded that Mr. Cohen could

deduct a certain portion of the

DECLARATION OF ROBERT B. KORY, ESQ, IN SUPPORT OF PLAINTIFFS'OPPOSITION

TO DEFENDANT KELLEY L\'NCH'S
MOTION TO VACATE AND/OR MODIFY DEFAULT JUDGMENT ENTERED MAY
I5, 2006

the summer of 2005. Accordingly, from a tax perspective, Mr. Cohen did not leam until mid-2005

that he had incurred a theft loss from Lynch's malfeasance in excess of $7 million dating back to

1998 but that he, and not Ms, Lynch, had paid the federal and state taxes due on the $7

income misappropriated by Lynch during that six year period. Mr. Mesnick agreed that a theft

loss was an appropriate deduction in 2005.

12.

million in

Mr. Mesnick included a seven figure theft loss on Mr. Cohen's 2005 federal and

state income tax returns. He also amended Mr. Cohen's 2003 and2004 federal and state income

tax returns to "carry back" the loss on the 2005 income tax returns arising from the theft loss. Mr.

Mesnick included a copy of the Complaint with Mr. Cohen's federal and state income tax returns

10

for 2005 in order to substantiate the size of the theft loss and explain the cary back of the loss to

1l

prior years with the amendment of those prior year income tax returns.

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13.

Mr. Cohen received six figure income tax refunds from the US Treasury and from

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the California Franchise Tax Board based on the filing of the 2005 federal and state income tax

t4

returns as well as the amended federal and state income tax returns for 2003 and2004.

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14.

On or about March 6,2007, Lynch reported to agent Kelly Sopko, special agent at

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the US Treasury for special inquires ("Agent Sopko"), that Mr. Cohen had allegedly committed

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tax fraud. Agent Sopko subsequently refer"red the matter to Luis Tejeda, head of the fraud group

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at the Inter:nal Revenue Service for the Western United States. I became aware of this sequence

t9

events by virtue of an email from Ms. Lynch on which I was copied. A true and correct copy

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that email is attached. (See Exh. B)

21,

15.

I called Mr. Tejeda on March 8,2007 regarding Ms. Lynch's allegations

of

and wrote

22

Mr. Tejeda a letter dated March9,2007 regarding the matter,

23

attached as Exhibit

24

review (i) Mr. Cohen's pre2005 estate planning structure, (ii) Lynch's misappropriation of Mr.

25

Cohen's funds based on her authority to administer Traditional Holdings,LLC, among other

26

entities established for Mr. Cohen's benefit as a retirement vehicle, and (iii) the treatment of the

27

theft loss on Mr. Cohen's 2005 federal income tax return and the carry back of the 2005 loss to

28

C.

a true and correct

of

copy of which is

I subsequently met with Mr. Tejeda in my office on April 79,2007 to

-5DECLARATION OF ROBERT B. KORY, ESQ, IN SUPPORT OF PLAINTIFFS'OPPOSITION TO DEFENDANT KELLEY LYNCH'S

MOTION TO VACATE AND/OR MODIFY DEFAULT JUDGMENT ENTERED MAY 15. 2006

t
)

2004 and 2003 through the amendment of Mr. Cohen's income tax returns for those prior years.

Mr. Mesnick attended that meeting.

16.

Following the review of the treatment of the theft loss with Mr. Tejeda, there was

no change in Cohen's income tax returns for any of the years at issue.

17.

Having failed to persuade the Intemal Revenue Service that Mr. Cohen was

engaged in tax fraud, Lynch unilaterally filed with the IRS, on or about December 15, 2008, a

form 1099 in the name of Traditional Holdings, LLC, allegedly reporting to the IRS that Cohen

received $7 million in income from of Traditional Holdings, LLC in 2008. I attach a true and

correct copy of the 1099 filed by Lynch on behalf of Traditional Holdings,LLC, redacted to

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remove Mr. Cohen's social security number. (See Exh. D)

18.

In response to Lynch's 1099 filing, I advised the IRS by letter on Decemb er 20,

t2

2008 that the 1099 was fraudulent. I attach a true and correct copy of my December 20,2008

13

letter to the IRS. (See Exh.

t4

legitimate document, Cohen has received no fuither communication regarding this matter from

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the IRS.

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19.

E).

The IRS has not treated the foregoing 1099 filing by Lynch as a

Mr. Cohen's income has risen substantially since he began touring again in 2008.

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He has paid all of his federal, state and foreign taxes. In some instances, the applicable tax

18

authorities have examined his returns, as is typical when a taxpayer reports a dramatic increase in

t9

income, There have been no changes in Mr. Cohen's tax returns as a result of those examinations.

20

20.

Mr. Cohen is in good standing with the US Treasury and the California Franchise

2l

Tax Board, and to the best of my knowledge, he is in good standing with the tax authorities of all

,,)

jurisdictions worldwide in which he has eamed income. Ms. Lynch's allegations that Mr. Cohen

23

has been engaged in "tax fraud" have no basis in fact or law, and are, plain and simple, defamatory

24

falsehoods,

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DECLARATION OF ROBERT B. KORY, ESQ, IN SUPPORT OF PLAINTIFFS, OPPOSITION TO DEFENDANT KELLEY L\1.ICH,S
MOTION TO VACATE AND/OR MODIFY DEFAULT JUDGMENT ENTERED MAY 15,2006

I declare under penalty of perjury under the laws of the State of California that the foregoing is

true and correct and that I executed this Declaration on tfr.

dtuy

of January 2014 atBeverly

Hills, California.

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Robert B. Kory

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)<
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-7DECLARATION OF ROBERT B. KORY, ESQ, IN SUPPORT OF PLAINTIFFS' OPPOSITION TO DEFENDANT KELLEY LYNCH'S
MOTION TO VACATE AND/OR MODIFY DEFAULT JUDGMENT ENTERED MAY 15. 2006

HX${TffigT

GIBSON, DLINN A CRUTCHER LLP

SCOTT A. EDELMAN, SBN 116927
2029 Century Park East
Suite 4000
Los Angeles, California 90067

Telephone: (310) 552-8500

Facsimile:

(310) 551-8741

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Attorneys for Plaintiffs

LEONARD NORMAN COHEN ANd
LEONARD COHEN INVESTMENTS, LLC

SI'PERIOR COURT, STATE OF CALIFORNIA

I
I

COLINTY OF LOS ANGELBS

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't3

LEONARD NORMAN COHEN, an

individual: LEONARD COHEN
INVESTMENTS, LLC, a Delaware Limited
Liability Company,
Plaintiffs,

CASE NO. BC 338322

DECLARATION OF KEVIN L. PRINS

IN SUPPORT OF DEFATILT
JUDGMENT AGAINST DEFENDANT
KELLEY A. LYIICH

14
V.
15
16

Hon. Kenneth Freeman, Department 64

KELLEY A. LYNCH, an individual;

RICHARD A. WESTIN, an individual;
DOES 1 through 50, inclusive,

Date of

of

17

Defendants.

filing

complaint:

August 15,2005

Plaintiffs' Case Summarv Pursuant to CRC

388 in Support of Default Judgment Against
DefendaniKelley A. Lynch Request for
Court Default Judgmeut, Memorandum
of Points and Authorities Pursuant to
CCP $ 579,Declarution of Leonard Norman
Cohen, Declaration of Scott A. Edelman,
Dismissal Without Preiudice of Does 1
through 50, and [Proprised] Judgment Filed
Concurrently Herewith

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19

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21

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I, KEVIN L. PRINS, declare as follows;

zc

1. I am over the age of eighteen.

The following facts are within my personal

26
27
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G&sm,

Dm&

Crulcher LLP

knowledge and,

if called and sworn

as a witness,

I could and would testify competently

thereto.
DECLARATION OF KEVIN L, PRINS IN SUPPORT OP
DEFAULT JUDGMENT AGAINST DEFENDANT KEI,LBY A. LYNCH

2. I am a Principal in the Los Angeles office

of Moss Adams, LLP, located at 11766

Wilshire B1vd, 9rl' Floor, Los Angeles, California 90025. I am the Chair of the Litigation

4
5

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7

Consulting practice for the firm.

3, For more than nineteen (19) years,

I have been engaged as a litigation consultant

and have performed hundreds of analyses relating to damage calculations and business
disputes, including analyses relating to the overpayment of professional foes.

I have been

o
10
11

12

qualified and admitted to testi$r as an expert witness in depositions, trials, binding

arbitrations, and before special court appointed masters and settlement judges. In addition to

providing testimony, I have also been retained as an independent arbikator and as a courtappointed special master. Attached hereto as Exhibit 1 is a summary of my professional

13

qualifications.
14
15

4.

Moss Adams has been retained by counsel for Plainfiff Leonard Norman Cohen

16

("Cohen") to 1) review andanalyza the monies deposited into various bank accounts of

17

Cohen;2) review and

w:m,lyze disbursements

from those bank aocounts; 3) calculate the

18

commission income earned by Defendant Kelley A. Lynch ("Lynch") based upon her
19

20
21

22
23

agreement with Cohen; 4) calculate what amount,

if

any,

Lynch appropriated above and

beyond her legitimate commission pursuant to her agreement with Cohen and 5) calculate any

prejudgment interest on any excess monies received by Lynch.

5. I have reviewed

bank statements and checks written from the following entities:

24
25
26

(")

Leonard Cohen Investments, LLC ("LCILLC) from the period

November 2000 through October 20A4;

27
28
Glbson, Ounn &
Cruicher LLP

DECLARATION OP KEVIN L. PRINS IN SUPPORT OF

DEFAULT IUDGMENT AGAINST DEFENDANT KELLEY A" LYNCH

(b)

April2001 through October 2004;

(o)

Leonard Cohen Family Trust, LLC ("LC Family Trust") summary

statement from the period of March 1997 through October 2004; and

(d)

6
7

Cohen's personal account from the period of January 1998 through

September of 2004.

(e)

.9

I have also reviewed selected checks from 1998 and 1999 made payable
to Cohen but deposited into Lynch's personal bank account.

10

6.

11

12

Traditional Holdings, LLC ("Traditional Holdings") from the period

Pursuarit to paragraph 11 in Cohen's declaration ("Cohen's Deslaration') zubmitted

concurtently herewith, I understand that Cohen had an oral agreement with Lynch and her

13

14

d/b/a Stranger Managemen! pursuant to which Lynch was entitled to receive l5o/o of the

15

income received by LCILLC and Traditional Holdings frorn third-party sources (i.e., royalty

16

payments from recording companies) for certain professional seryices performed by Lynch in

17

her capacity as business manager to Cohen, LCIJ-LC, and Traditional Holdings.

I also

1B

understand, pursuant to pnragtaph 11 of Cohen's Declaration, that Lynch was to receive a

19

20
21

22
23

z4
25

$20,000 annual management fee payrnent from Traditional Holdings. Pursuant to paragraph
1

of Cohen's Declaration, I understan d that at no time was Lynch ever entitled to any money

from the LC Family Trust or from Cohen's personal account.

7. Pursuant

to paragraph 4 in Cohen's Declaration, I have been informed that Cohen

had complete ownership interests in LCILLC, the LC Family Trust and Cohen's personal

of

26

checking account. I have assumed that, as alleged in the complaint and in Paragraph 5

27

Cohen's Declaration, Cohon has a beneficial ownership interest in Traditional Holdings.

28
Glbrcn, Dunn &
Crutcher LLP

DECLARATION OF KEVIN L. PRINS IN SUPPORT OF

DEFAULT JUDCMENT AGAINST DBFENDANT KELLEY A. L\N'ICH

IrC Family Trust

15. I have reviewed

a summary statement

provided by Neal Greenberg, a former

Cohen financial advisor, relating to the LC Family Trust. This summary statement lists all

the deposits, ohecks, hansfers and the entity or person which received the funds in question

including checks made payable to Lynch.

16.

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11

12

From Marsh 1997 through October 2004,Lynch received $304,500 from the LC

Fanoily Trust bank account. As discussed above, no agreement between Lynch and Cohen

existed pursuant to which she was to receive any income or payments from the LC Family

Trust. Therefore, Lynch was not entitled to any of the $304,500 she actually reoeived from
the LC Family Trust account, The calculations provided in the F Schedules of Exhibit 2

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14

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16
17

compaxe the value of the payments to which Lynch was entifled to the value of the payments

Lynch actually received from the LC Family Trust account. Exhibit 5 is a true and correct
copy of the summary statement provided to me,
Cohenls Pglsonal Checking Account

18

17. As disoussed above, I have reviewed banks statements and checls from the
1S

20

Cohen's personal checking account from the period January 1998 through September 2004.

21

The check copies provided to me include the front side of the checks which includes the

22

payee and the amount; and the back side of the checks which shows the endorsement

23
24
25
26
27

signature and the account number into which the check in question is being deposited.

18.

Based upon these endorsements I was able to determine that Lynch's bank

account number was A01622099 and the Stranger Management's bank account number was
001338099,

28
Gibs'on, Dunn &

Crulchtr LLP

DECLARATION OF KEVIN L. PRINS IN SUPPORT OF

DEFAULT ILTDGMENT AGAINST DEFENDANT KELLEY A, LYNICH

Chpcks made payablq.:to.Qohen but dppp*sited iULo Lynch's personal.pccqqnt

8.

Between December 1998 and May 1999, Lynch deposited $229,500 in checks

made payable to Leonard Cohen or FBO Leonard Cohen (For the Benefit of Leonard Cohen)
4
5

into her own personal bank account. On the basis of patagraph 20 of Cohen's Deolaration, I

undorstand that Lynch had no agreement with Cohen, pursuant to which she was to retain

these funds or deposit these funds into her bank account. Attached hereto as Exhibit 2 is a

8
o
10
11

12

true and correct copy of a spreadsheet that I have prepared in connection with my review
the records noted above inparagraph 5 (a)

- (e). The C Schedules

of

in Exhibit 2 oontain a

summary of checks deposited into Lynch's account. True and correct copies of selected
checks made payable to Leonard Cohen which Lynch endorsed and deposited in her own

13

account are attached hereto as Exhibit 3.

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15
16
17
18

LCILL-e

g.

As discussed above, I have reviewed banks statements and checks from the

LCILLC bank account from the period November 2000 through October 2004. The check
copies provided to me include the front side of the checks which inciudes the payee and the

19

20
21

22
23

amount; and the back side of the checks whioh shows the endorsement signature and the
account number into which the check in question is being deposited.

10. Based upon these endorsements I was able to determine that Lynch's

bank

account number was 0A1622099 and the Stranger Management's bank account number was

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25
26
27
28
cbw,

Dunn &
Crulcher LLP

001338099.

11.

The LCILLC bank statements indicate when an elecffonic transfer of funds is

mado out of the

LCILLC bank account and into another account. The bank statements also
4
DECLARATION OT KEVIN L. PRINS IN SIIPPORTOF
DEFAULT ruDG}VtENT AGAINST DEFBNDANT K.ELLEY A. LYNCII

indicate into which account the funds in question are being deposited, As discussed above

review of the checks indicates which aecounts belong to Lynch and Stranger Management.

Therefore I was ablo to match the Lynch and Strangor Management account numbers on the
4
5

bank statements to determine how much money was electoonically transferred into those

accounts-

12.

From November 2000 through October 2004,Lynchand her d/b/as received, via

check and elechonio transfer, a total of $1,638,880 from the LCILLC bank account; Stranger

10

Management received $1,248,871and Lynch received $389,258. AmazingCard Co.

11

("Amazing Card"), another Lynch dhla,recaved $750.

l2

13. As noted

above, Lynoh's agreement

with Cohen provided that

she was to receive

13

l5% of the income received by LCILLC from third-party sources. During this time period
14

15

from November 2000 through October XA}4,LCE-I-C received $2,597,454, Therefore

16

Lynch's income from LCILLC should have been $388,71 8 ($2,591,454 x 15%).

17

14. As such, Lynch therefore received $1,250,161 ($1,638,880

Iess $388,718) more

18

than she should have received from the

LCILLC account. The calculations provided in the E

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20

Schedules of Exhibit 2 compare the value of the payments to which Lynch was entitled to the

21

value of the payments Lynch actually received from

c,

LCILLC. True

and correot copies

of

selected checks made payable to Lynch and Stranger Management and bank statements

23

showing the transfers into Lynch and Shanger Management accounts are attached hereto as
?4

25

Exhibit 4.

to
27

/t/

28

Gibson, Oum &

CrutcherLLP

DECLARATION OF KEVIN L, PRINS N{ SUPPORT OF

DEFAULT ruDGMENT AGAINST DEFENDANT KELLEY A. LYNCH

19.

Cohen's bank statements indicate when an electronic transfer of funds is made

out of Cohen's oheoking aocount and into another account. The bank statements also indipate

into which account the funds in question are being deposited, As discussed above a review of
4

the checks indicates which accounts belong to Lynoh and Stranger Management. Therefore

was able to match the Lynch and Stranger Management account nurnbers on the bank

statements to determine how much money was elechonically transferred into those accounts.

20, From January

1998 through September 2004, Lynch and her dlb/asreoeived, via

account. Stanger

10

check and electronic transfer, $2,414,238from Cohen's personal checking

11

Management received $1,683,365, Lynoh received 9728,372, and Amazing Card received

12

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$2,500.

21.

As discussed above, no agreement existed between Cohen and Lynch pursuant to

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15

which Lynch was to receive any income or payments from Cohen's personal checking

16

account. Therefore, Lynch was not entitled to any of the $2,414,238 she actually received

17

from Cohen's personal checking account. The calculations provided in the G Schedules of

1B

Exhibit 2 compare the value of the payments to which Lynch was entitled to the value of the
19

20

payments Lynch actually received from Cohen's personal cheoking account. True and

21

correct copies of selected checks made payable to Lynch and Stranger Management and bank

22

statements showing the hansfers into Lynoh and Stranger Management accounts are attaohed

11

hereto as Exhibit 6.
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25

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22. Thetotal

amount of monies received by Lynch in excess of monies to which she

was entitled to receive from those accounts totals $3,968,899 ($1,250,161 + $304,500 +
$2,414,238).

40
ZO

Gibsm,

Dum*

Crutshet LLP

DECLARATION OF KEVIN L. PRINS IN SUP?ORT OF

DEFAULT ruDGMENT AGAINST DEFBNDANT KELLBY A. LIT{CH

Tradi tional Holdiq

g-s.

23. I have reviewed

a summary statement provided

by Neal Greenberg, a former

3
4

Cohen financial advisor, relating to the TraditionalHoldings. This summary statement lists

all the deposits, checks, transfers and the entity or person which received the funds in

question including checks made payable to Lynch, In addition I have received copies

I
I

of

checks written on the Traditional Holdings bank account

24. From

April 2001 tlrrough October 2004, Lynch and her dlblas received

a total

10

$4,A42,264 from Traditional Holdings. Stranger Management received $1,201,250, and

11

Lynch received $2,841,014.

12

25.

of

As noted above, Lynch was to receive 15% of the income received by Traditional

13
14

Holdings from third-party sources. Per the Greenberg prepared statement, during this time

15

period, Traditional Holdings received $6,675,000. Therefore, Lynch's income from

16

Traditional Holdings resulting from transactions with third parries should have been

17

$1,001,250 (S6,675,000

x l5%),

't8
19

26. As noted above, Cohen ageed to pay Lynch $20,000 per year from Traditional

20

Holdings. Traditional Holdings was formed in 2001, and Cohen terminated his reiationship

21

with Lynch in2004; it is assumed, therefore, for purposes of this analysis that Lynch would

22

receive $20,000 per year for all partial and full years from 2001 through 2004, equating to

ZJ

24

25
28
27

four (4) installments of $20,000 par year, or $80,000 of payments to which Lynch was
entitled pursuant to her agreement with Cohen

27. The agreed-to payments set forth above from Traditional Holdings to Lynch for
the years 2001 through 2004 thus total S1,081,250 ($1,00 1,250 +$80,000).

28
GlbE6, Dunn &
Crulchs LLP

DECLARATION OF KEVIN L. PRINS IN SUPPORT OF

DEFAULT ruDGMENT AGAINST DEFENDANT KELLEY A. LYNCH

28, Lynch,

therefore, reoeived $2,961,014 ($4,042,264less $1,081,250) more than

she should have received from the Traditional Holdings aocount. The H schedules in Exhibit

provide calculations that compare the payments Lynch was entitled to receive to the

4
5

payments Lynch actually received from Traditional Holdings. True and correct copies

selected ohecks made payable to Lynch and Stranger Management and the Greenberg

I
I
10
11

12

of

prepared summary statement showing the checks and transfers to Lynch and Stranger

Management are attached hereto as Exhibit 7,

Prejudgment Interest
29

Atthe request of counsel, I have oalculated prejudgment interest on the arnourits

received by Lynch in excess of the amounts to which she was entitled. Prejudgment interest

13

is calculated at the California Statutory Rate

of 10% simple interest, and for purposes of this

14
15

calculation, it is calculated through January 31, 2006. For the amounts made payable to

16

Cohen but deposited into Lynch's personal account, the prejudgment interest totals $144,766.

17

For Leonard Cohen's personal account,

LCILC

and the LC

Family Trust, the prejudgment

18

interest totals $1,65 3,401. For Traditional Holdings, the prejudgment interest totals
19

20

$543,178. In total, then, the applicable prejudgment interest totals $2,341,345. The B

21

Schedules

22

in Exhibit 2 provide calculations of prejudgment interest.

//t

23

t/t
24
25

//t

26

///

27

//t

28
Glbsm, Dun &
crutcher LLP

DBCLARATION OF KBVIN L. PRINS IN SI]PPORT OF

DEFAULT JUDGMENT AOAINST DEFBNDANT KELLEY A, LYNCH

$pmmary
30. The total amount of monies reoeived by Lynch in excess of the amounts to which

4
5

6
7

I
I
10
11

she was properly entitled, including prejudgment interest, is summarized as follows:

i.
ii.

Cohen checks deposited into Lynch accounts

229,500

Accounts in Cohen's name

3,968,899

iii.

Traditional Holdings

2.e-6Lgt4

iv.

Subtotal

7,759,413

v. Prejudgment interest

2.341.14"s_

vi. TOTAL

s9-500.7s8

12
13

I declare under penalty of perjury under the laws of the State of California that the foregoing

14

is true and correct and that

15

Los Angeles, California.

executed this Declaration on the 24th day of January, 2006 at

16
17

L. Prins

1B

19

20
21

22

23
24
2E

26
27
28
Gibsm, Dum &
Cruldrer LLP

t0
DECLARATION OF KEVIN L. PRINS IN SUP}ORT OF
DEFAULT ruDGMENT AGAINST DEFENDANT K.ELLEY A. L\'}ICH