Response: - TO MTN TO ELIMINAE ATTORNEY CLIEND & WORK-PRODUCT PRIVILEGES & COUNTER-MTN FOR FINAL SUM JUDGMENT Due Date: Complete Date: January 05, 2018 (2024)

 
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 Filing # 66171482 E-Filed 01/05/2018 02:54:13 PMIN THE CIRCUIT COURT OF THE11™ JUDICIAL CIRCUIT IN AND FORMIAMI-DADE COUNTY, FLORIDACASE NO.: 13-17671 (CA 32)KENT D. SMITH, CHARLES ARENA,MALCOLM BRADLEY, THOMASCAMPAGNA, DONALD CAMPAGNA,CHARLIE DAVIS, BARBARA FELDMAN,GARY FELDMAN, PHIL FRIEDLAND,AL GOLDIN, JANET GURSKIS,NEIL BRUSSARD, SEAN JIMENEZ,MARLENE LOONEY, GREGORY LOONEY,MIKE MCHUGH, JOHN WHITAKER,AND CRAIG ZINKOWSKI,Plaintiffs,vs.JEFFREY TEW and TEW CARDENAS, LLP,Defendants./DEFENDANTS’ RESPONSE TO PLAINTIFFS’ MOTION TOELIMINATE THE ATTORNEY-CLIENT AND WORK-PRODUCTPRIVILEGES PURSUANT TO THE CRIME FRAUD EXCEPTIONAND DEFENDANTS’ COUNTER-MOTION FOR FINAL SUMMARY JUDGMENTDefendants, TEW CARDENAS, LLP and JEFFREY TEW, by and through theundersigned counsel, oppose Plaintiffs’ Motion to Eliminate the Attorney-Client and Work-Product Privileges Pursuant to the Crime Fraud Exception (“Motion”) and counter-move forFinal Summary Judgment against Plaintiffs as follows:SUMMARY OF THE ARGUMENTBoth the crime-fraud exception, and Plaintiffs’ causes of action for aiding-and-abetting afraud, require the fact-finder to make an express finding of fraud. Plaintiffs, although movingtargets, have set-forth the following theories of fraud:COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 33401 (S61) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 321. Deposits were paid back from other purchasers’ deposits:2. A substantial portion (40%) of the deposits were used to pay Independent SalesOffices (“ISOs”) for their assistance in marketing;3. Stephen Tashman’s involvement in Paragon was not disclosed to purchasers; and4. The Property Report was never provided to Paragon purchasers.Plaintiffs’ allegations, at most, convey an unsuitable business model that eventually led tocollapse. A failed business, however, does not equate to a fraudulent business. After over fouryears of discovery, Plaintiffs are unable to present evidence establishing that Paragon Propertiesof Costa Rica (“Paragon”), Stephen Tashman or Willian Gale perpetrated a fraud. This issue hasbeen brought before the Southern District of Florida and the Florida Bar, with no finding offraud. The Southern District of Florida stated in its Order Denying Plaintiffs’ Motion for ClassCertification that “[a]lthough plaintiffs make the sweeping allegation that the entire project was afraud from the start, after a year-and-a-half of discovery, Plaintiffs have not presented theCourt with any direct evidence of actual fraud or racketeering.” See Order Denying Plaintiffs’Motion for Class Certification, attached hereto as Exhibit 1 (emphasis added). Likewise, TheFlorida Bar has recognized that there has been no evidence of fraud. Plaintiff, Kent Smith, filed acomplaint with the Florida Bar which alleged “Mr. Tew was complicit in assisting a client in theviolation of a court order, thereby facilitating a fraud on investors involving the sale of vacantlots in Costa Rica.” See Florida Bar Correspondence, attached hereto as Exhibit 2. Afterinvestigation, the Florida Bar determined to close the file. /d. The Florida Bar further noted that,“to date, there has been no judicial determination of fraud by Mr. Tew’s client.” /d. As statedfurther herein, this Court should likewise hold that Plaintiffs have failed to establish that Paragonwas a fraud.-2-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32STATEMENT OF UNDISPUTED MATERIAL FACTS1. September 30, 2004 Paragon Properties of Costa Rica was incorporated.See Incorporation of Paragon, attached hereto as Exhibit 3.2. Paragon was the rightful owner of real estate in Costa Rica.See Transcript of Unsworn Statement of Alejandro Antillon, dated May 29, 2013, Pages 43-45,attached hereto as Exhibit 4 (“is Paragon Properties a company that owns real estate? They certainlydid: a vast amount of real estate. Did they appear to be a business, a rightful business developing realestate in Costa Rica? They certainly appeared to be that. If they failed, as thousands of projects in CostaRica have failed during the crisis, the 2009/2010 real estate crisis, I suppose, yeah, it could happen. . . .What I can tell you is that everything that I reviewed from Paragon Properties, as an expert in real estatelaw and as an expert in the Costa Rican real estate market, led me to believe that Paragon Propertieswas a rightful real estate endeavor and that he [sic] was not, like in other cases I’ve seen in Costa Rica,you know, ashamed [sic] or a charade, and people were being sold interest in land that didn’t exist. Here,the land existed. Here, everything suggests that this was an actual real estate development or an actualreal estate developer. What happened to it, I don’t know. But they’ re telling — they seemed to be a legitenterprise between 2004 and 2009, from what I could get from public records.”)3. Paragon improved land in Costa Rica.See Anita Oginsky, et al. v. Paragon Properties of Costa Rica, LLC, et al., Case No. 10-21720-civ-KING, Order Denying Plaintiffs’ Motion for Class Certification [D.E. 254], (“theuncontested evidence reveals that some of the improvements were completed by Defendants[Paragon] as promised, such as the construction of gutter systems on 10% of the lots and 20miles of roads throughout the planned project.”), attached hereto as Exhibit 14. Plaintiffs signed Agreements for Deeds dating from September 23, 2004 throughJanuary 25, 2008.See Agreements for Deed, attached hereto as Exhibit 5.5. The Property Report was finalized after Plaintiff's executed Agreements for Deed,which the Department of Housing and Urban Development was aware.On December 28, 2007, HUD sent a letter to Jerry E. Aron, P.A. stating, “Congratulations! YourState of Record if accepted as a filing under the Interstate Land Sales Full Disclosure Act.”See Correspondence dated December 28, 2007, attached hereto as Exhibit 6. The letter furtherstated please send HUD two copies of the final printed version of the Property Report and twocopies of the final sales contract form within twenty (20) days of this letter.” /d.6. Stephen Tashman was not concealed from Plaintiffs.See Charles Arena Deposition, at 15:10-12 (“Q. And how often did you see — see Steve Tashmanat the offices of Paragon Properties? A. For about the year that I was there, every day.”), attachedhereto as Exhibit 7; See Mike McHugh Deposition, at 26:15-20 (“Q. How did you know that ---3-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32A. He introduced himself. Q. What did he introduce himself as? A. Said, ‘My name is SteveTashman.’ Q. Did you speak to him? A. Just said hello, basically.”), attached hereto as Exhibit8; see Neil Brussard Deposition, 24:25-25:1, (*Q. Do you recall who Steven Tashman is? A.Steven Tashman, I met him at the meet-and-greet.”), attached hereto as Exhibit 9; See KentSmith Deposition, at 175:15-20, attached hereto as Exhibit 10; see a/so, deposition of Al Goldin,64:22-65:5 (“Q. Did you ever ask anyone who he [Stephen Tashman] was? A. No. Q. Did youever ask anyone who the principals of Paragon were? A. No, because William Gale made it clearhe was the president and CEO, I believe, of Paragon Properties.”), attached hereto as Exhibit 11;see also Malcolm Bradley Deposition, 25:1-4 (*Q. Did you ask who the owner of Paragon was,who the principal, who’s on the board? A. No, I didn't ask those questions, no”), attached heretoas Exhibit 12.7. In January 2005, Paragon retained Tew Cardenas, LLC to review sales scripts andto review the Agreement for Deed.See Jeffrey Tew’s Verified Response to Kent Smith’s Bar Complaint, attached hereto as Exhibit13.8. No court of law has adjudicated, on the merits, that Paragon committed a fraud.See Florida Bar Correspondence (noting that “to date, there has been no judicial determination offraud by Mr. Tew’s client.”), attached hereto as Exhibit 2; see Anita Oginsky, et al. v. ParagonProperties of Costa Rica, LLC, et al., Case No. 10-21720-civ-KING, Order Denying Plaintiffs’Motion for Class Certification [D.E. 254], (“[a]lthough plaintiffs make the sweeping allegationthat the entire project was a fraud from the start, after a year-and-a-half of discovery, Plaintiffshave not presented the Court with any direct evidence of actual fraud or racketeering.”),attached hereto as Exhibit 1.9. On July 11, 2006, Judge Kenneth L. Ryskamp entered his Findings of Fact,Conclusions of Law, and Final Order in the Federal Trade Commission (FTC)Lawsuit enjoining Mr. Tashman from (i) personally engaging “in the marketing,offering for sale, or selling of any franchise, business venture or investment” or (ii)“providing substantial assistance to others” in their “marketing, offering for sale, orselling of any franchise, business venture or investment.”See Injunction Order, at p.20, attached hereto as Exhibit 14.10. On July 25, 2006, Mr. Tew disclosed Mr. Tashman’s new employer, Costa RicaLand and Development, to the FTC.See July 25, 2006 Correspondence from Jeffrey Tew to Federal Trade Commission, attachedhereto as Exhibit 15.MEMORANDUM OF LAW.I. Legal Standards-4-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 33401 (361) 383-9200 - (561) 683-8977 FAXCase No. 13-17671 CA 32a. Crime-Fraud Two-Prong TestThe crime-fraud exception may only apply in extraordinary and rare circ*mstances. SeeCox v. Administrator U.S. Steel & Carnegie, 17 F.3d 1386, 1422 (11th Cir. 1994); MCCManagement of Naples, Inc. v. Arnold & Porter LLP, 2010 WL 2431849, 2 (M.D. Fla. 2010)The Eleventh Circuit Court of Appeals has set forth a two-prong test to determine whether thecrime-fraud exception applies to attorney-client communicationFirst, there must be a prima facie showing that the client was engaged in criminal orfraudulent conduct when he sought the advice of counsel, that he was planning suchconduct when he sought the advice of counsel, or that he committed a crime or fraudsubsequent to receiving the benefit of counsel’s advice. Second, there must be a showingthat the attorney’s assistance was obtained in furtherance of the criminal or fraudulentactivity or was closely related to it.!The first prong is satisfied by a showing of evidence that, if believed by a trier of fact,would establish the elements of some violation that was ongoing or about to becommitted.The second prong is satisfied by a showing that the communication is related to thecriminal or fraudulent activity established under the first prong.In re Grand Jury Investigation, 842 F.2d 1223, 1226 (11th Cir. 1987) (emphasis added)(citations omitted) (“That showing must have some foundation in fact, for mere allegations ofcriminality are insufficient to warrant application of the exception.”); see also Am. Tobacco Co.y. State, 697 So. 2d 1249, 1256 (Fla. 4th DCA 1997) (“the party opposing the privilege on thecrime-fraud exception has the initial burden of producing evidence which, if unexplained, wouldbe prima facie proof of the existence of the exception...[t]he vast majority of state and federalcourts have applied the prima facie evidence standard to establish the crime-fraud exception tothe attorney-client privilege.”). (citations omitted), BNP Paribas v. Wynne, 967 So. 2d 1065,1067 (Fla. 4th DCA 2007) (“[t]he dispositive question is whether the attorney-client1. “Relevance alone is not sufficient to give life to the exception.” Gutter v. EJ. Dupont De Nemours, 124 F.Supp. 2d 1291, 1314.-5-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32communications are part of the client's effort to commit a crime or perpetrate a fraud.”).(citations omitted); First Union Nat. Bank of Fla. v. Whitener, 715 So. 2d 979, 982 (Fla. 5thDCA 1998) (“there is no attorney-client privilege when the services of the lawyer are sought orobtained to enable or aid anyone to commit or plan to commit what the client knew was a crimeor fraud. The party seeking to invoke the fraud exception must present prima facie evidence thatthe client sought the advice of counsel to procure a fraud.”). (citations omitted). As discussedherein, Plaintiffs failed to meet either prong because there is no evidence of any discernablefraud, nor related communication with counsel.b. Summary JudgmentUnder Florida law, the standard governing the determination of a motion for summaryjudgment is well settled. Florida Rule of Civil Procedure 1.510 states.The judgment sought shall be rendered forthwith if the pleadings,depositions, answers to interrogatories, and admissions on file togetherwith the affidavits, if any, show that there is no genuine issue as to anymaterial fact and that the moving party is entitled to judgment as a matterof law.FLA. R. Crv. P. 1.510 (emphasis added). An issue is ripe for summary judgment when the non-moving party has failed to establish the existence of any genuine issue of material fact whichwould preclude summary judgment. Landers v. Milton, 370 So. 2d 368, 370 (Fla. 1979).Summary judgment should be granted where the salient facts are not an issue and wherethe controversy has resolved into one purely of law to be decided on the undisputed facts. Yost v.Miami Transit Co., 66 So. 2d 214, 215 (Fla. 1953). It is well recognized that the non-movingparty faced with an appropriate summary judgment motion may not rely on bare, conclusoryassertions found in the pleadings to create an issue and avoid summary judgment. Instead, thenon-moving party must produce counter-evidence establishing a genuine issue of material factBryant v. Shands Teach. Hosp. and Clinics, Inc., 479 So. 2d 165 (Fla. 1st DCA 1985); Johnson-6-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32v. Gulf Life Ins. Co., 429 So. 2d 744 (Fla. 3d DCA 1983); Jones v. Hartford Accident &Indemnity Co., 109 So. 2d 582 (Fla. 1st DCA 1959)The object of a motion for summary judgment is to separate what is formal or pretendedin averment from what is genuine or substantial, so that only the latter may subject a suitor to theburden of trial. Meadows v. Edwards, 82 So .2d 733 (Fla. 1955). Upon the filing of a motion forsummary judgment, the burden shifts to the non-moving party to demonstrate with specificevidence that a triable issue of fact remains on which the non-moving party bears the burden ofproof at trial. See Spradley v. Stick, 662 So. 2d 610 (Fla. Ist DCA 1993). Clearly, it is notenough for the non-moving party to merely assert that an issue does exist. Landers, 370 So. 2d368, 370 (Fla. 1979), Buitrago v. Rohr, 672 So. 2d 646 (Fla. 4th DCA 1996). Accordingly,summary judgment is appropriate where, as here, the non-movant has failed to show theexistence of any genuine issue of material fact precluding summary judgment on this issue.I. There is no Evidence of any Crime / Fraud; therefore Summary Judgmentshould be Entered in Favor of Defendants on Plaintiffs’ Aiding and AbettingClaimIn the civil context, fraud may occur upon the existence of: “(1) a false statementconcerning a specific material fact; (2) the maker’s knowledge that the representation is false; (3)an intention that the representation induces another’s reliance; and (4) consequent injury by theother party acting in reliance on the representation.” See Brooks Tropicals, Inc. v. Acosta, 959So. 2d 288 (Fla. 3d Dist. 2007) (stating the elements of a cause of action for fraud).i. Plaintiffs’ Theories of Fraud are Unsupported by Evidence and Failunder Florida LawPlaintiffs’ Motion and Complaint assert four theories of fraud (1) Deposits were paidback from other purchasers deposits; (2) A substantial portion (40%) of the deposits were used topay ISOs for their assistance in marketing; (3) Stephen Tashman’s involvement in Paragon was-7-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32not disclosed to purchasers; and (4) the Property Report was never provided to Paragonpurchasers. None of these facts prove that Paragon, William Gale or Stephen Tashmancommitted a fraud.1) Deposits were paid back from other purchasers depositsParagon was not paying investment returns to purchasers from the new deposits comingin — which could be a characteristic of a Ponzi scheme. Paragon was issuing refunds from theworking capital that it had. Of course, as with any business, when a refund is issued, it is from apot of comingled funds. The purchasers, including Plaintiffs, received a letter from the escrowagent, stating that “[a]fter Paragon sends you an executed and validated copy of your Agreementfor Deed, your funds will be released to Paragon.” See Neustein Correspondences, attachedhereto as Composite Exhibit 16 (emphasis added). Thus, the purchasers were on notice thattheir funds were being released to Paragon. Al Goldin Deposition, 48:22-49:5 (“In this case, weunderstood or I understood that the escrows were being released because I know that was in theagreement, but it was represented to me that money was specifically earmarked for theinfrastructure of the planned community in which I had the agreement to purchase the lots.”),attached hereto as Exhibit 11. If a purchaser then requested a refund, it would typically comedirectly from Paragon. Plaintiffs have absolutely no evidence that paying a refund from acomingled account of money constitutes a fraud. Accordingly, this theory cannot supportPlaintiffs’ claim for aiding and abetting a fraud.2) A substantial portion of the deposits were used to pay ISOs for their assistancein marketingPlaintiffs claim that Paragon’s marketing scheme is a fraud because the ISOs werereceiving 40% commissions. The fact that Paragon was paying sales offices a substantialcommission, may be a bad business model, but certainly does not amount to fraud. This Court-8-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32has recognized that the mere fact that a high percentage of commission was going to sales officesdoes not evince fraudMR. HESS: With regard to Mr. Gale's deposition, I think it's of extreme importance thatas much as 40 percent of the money that was supposed to go for such things asconstruction, development to infrastructure actually went to pay marketing efforts. AndMr. Gale --THE COURT: How does that constitute a fraud?MR. HESS: Well, if you undercapitalize a business and use money for purposes that wasnot disclosed and —THE COURT: Who were the marketers?MR. HESS: They were independent sales agents. However, Lisa Tashman and herhusband, and Mr. Gale were principals of some of the largest of the independent salesoffices.THE COURT: I found it.MR. HESS: Okay.MR. HESS: But, Your Honor, also with regard --THE COURT: Okay. So you have evidence that it was not a good business model.See Crime-Fraud transcript, 6/18/15, 18:13-19:10, attached hereto as Exhibit 17.Furthermore, Plaintiffs have presented absolutely no evidence regarding a falserepresentation of a material fact that was intended to induce the purchasers related to thecommissions paid to the sales offices. See Brooks Tropicals, Inc., 959 So. 2d 288. This theory ismerely a red herring raised by Plaintiffs, and has nothing to do with proving a fraud3) Stephen Tashman’s involvement in Paragon was not disclosed to purchasersPlaintiffs claim that a failure to disclose Stephen Tashman’s history is evidence of fraudInitially, this is illogical as the nondisclosure of a person’s history and participation in a companydoes not indicate fraud. Plaintiffs must establish that Paragon, Willian Gale or Stephen Tashman“intentionally fail[ed] to disclose” Stephen Tashman’s involvement in Paragon and that suchdisclosure was material in the transaction. Nessim v. DeLoache, 384 So. 2d 1341, 1344 (Fla. 3dDCA 1980) (“The classic illustration of fraud is where one party having superior knowledgeintentionally fails to disclose a material fact.”).-9-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32Here the evidence demonstrates just the opposite —- Stephen Tashman met many of thepurchasers and that the purchasers never inquired into Stephen Tashman’s history. Plaintiffshave absolutely no evidence that Stephen Tashman’s involvement was concealed, or that anymaterial misrepresentations, or omissions, were made regarding Stephen TashmanMany of the Plaintiffs in this action testified that they actually met and spoke withStephen Tashman for themselves, indicating that Mr. Tashman was not concealed from thePlaintiffs. See Charles Arena Deposition, at 15:10-12 (“Q. And how often did you see — seeSteve Tashman at the offices of Paragon Properties? A. For about the year that I was there, everyday.”), attached hereto as Exhibit 7; See Mike McHugh Deposition, at 26:15-20 (“Q. How didyou know that -- A. He introduced himself. Q. What did he introduce himself as? A. Said, ‘Myname is Steve Tashman.’ Q. Did you speak to him? A. Just said hello, basically.”), attachedhereto as Exhibit 8; see Neil Brussard Deposition, 24:25-25:1, (“Q. Do you recall who StevenTashman is? A. Steven Tashman, I met him at the meet-and-greet.”), attached hereto as Exhibit9Furthermore, the Plaintiffs never inquired into the history of Stephen Tashman. WhenPlaintiff, Kent Smith was asked whether he inquired into Paragon, Plaintiff testified that he hadnever asked about the history of Paragon, who started Paragon, the success of Paragon or whothe principals of Paragon were. See Kent Smith Deposition, at 175:15-20, attached hereto asExhibit 10; see also, deposition of Al Goldin, 64:22-65:5 (“Q. Did you ever ask anyone who he[Stephen Tashman] was? A. No. Q. Did you ever ask anyone who the principals of Paragonwere? A. No, because William Gale made it clear he was the president and CEO, I believe, ofParagon Properties.”), attached hereto as Exhibit 11; see also Malcolm Bradley Deposition,25:1-4 (“Q. Did you ask who the owner of Paragon was, who the principal, who’s on the board?A. No, I didn't ask those questions, no”), attached hereto as Exhibit 12. In essence, Plaintiffs-10-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32have never inquired into Mr. Tashman’s history and participation in Paragon, yet improperlyaccuse Mr. Tew of concealing same. Accordingly, Plaintiffs have no evidence that the allegednon-disclosure of Stephen Tashman amounted to a fraud.4) The Property Report was never provided to Paragon purchasersPlaintiffs claim that Paragon is a fraud because a Property Report was never provided toParagon purchasers before signing their Agreements for Deed. However, Plaintiffs haveabsolutely no evidence that this Report was kept, let alone intentionally concealed, from thePurchasers. In fact, the evidence demonstrates that the final printed version of the PropertyReport was due to U.S. Department of Housing and Urban Development (“HUD”) on January12, 2008. Every named Plaintiff signed an Agreement for Deed before the Property Report waseffective.” Thus, the nondisclosure of the Property Report cannot amount to fraudulent omissionwhen the Property Report did not even exist.Furthermore, Plaintiffs have set forth absolutely no evidence that the Property Report wasknowingly concealed. To prove fraud by omission, Plaintiffs must establish that Paragon,William Gale, or Stephen Tashman intentionally failed to disclose a material fact to thepurchasers. Nessim, 384 So. 2d at 1344 (“The classic illustration of fraud is where one partyhaving superior knowledge intentionally fails to disclose a material fact”), Ward v. Atl. Sec.Bank, 777 So. 2d 1144, 1146 (Fla. 3d DCA 2001) (“Fraud also includes the intentional omissionof a material fact.”). In fact, the undisputed evidence supports that Paragon retained separatecounsel, Jerry E. Aron, P.A. to assist in complying with HUD. See Correspondence datedDecember 28, 2007, attached hereto as Exhibit 6. Jerry E. Aron, P.A. assisted in drafting andsubmitting the Property Report to HUD. On December 28, 2007, HUD sent a letter to Jerry E.2. Although Plaintiff, Kent Smith, signed a second Agreement for Deed thirteen days after the finalprinted version of the Property Report was due, Mr. Smith has no evidence that the Property Report wasintentionally concealed from him.-ll-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32Aron, P.A. stating, “Congratulations! Your State of Record if accepted as a filing under theInterstate Land Sales Full Disclosure Act.” /d. The letter further stated please send HUD twocopies of the final printed version of the Property Report and two copies of the final salescontract form within twenty (20) days of this letter.” /d. William Gale testified that Paragonspent over $200,000 registering with HUD:William Gale: I believe Jeff Tew was on the call. When we were discussing theregistration with HUD, she indicated she knew an attorney in, I think it was Boca, andthat's the guy we dealt with, we spent $210,000 getting registered with the federalgovernment.See Gale Deposition, 29:24-30:3, attached hereto as Exhibit 18The foregoing evidence established that Paragon spent a significant amount of resourcesand time working with HUD toward compliance and registration. Plaintiffs have absolutely noevidence that Paragon intentionally concealed the Property Report. Accordingly, this Courtshould properly reject Plaintiffs’ argument that the alleged failure to disclose the Property Reportconstituted a fraud, and enter summary judgment in favor of Defendants.5) Plaintiffs’ Reliance on Defendants’ Privilege Log is ImproperPlaintiffs claim that Defendants’ privilege log establishes that Stephen Tashman violatedthe FTC Injunction Order. See Motion, §{]24, 28. This position is absurd. The entry on theprivilege log states: from Stephen Tashman to Jeffrey Tew, Esq., Email with the followingattachments: (1) Image of letter from Estebon Soto to Asesoria Bancaria Integrada regardingappraisal of The Heights of Pacifica (jpg) and Sales script (Word document). The mere sendingof a sales script to counsel certainly does not amount to engaging “in the marketing, offering forsale, or selling of any franchise, business venture or investment” or (ii) “providing substantialassistance to others” in their “marketing, offering for sale, or selling of any franchise, businessventure or investment.” See Injunction Order, at 20.-12-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32Furthermore, Defendants’ privilege log is not admissible evidence to support the crime-fraud exception. “[T]he trial judge should not examine written communications between attorneyand client, unless the party seeking to establish the crime-fraud exception adduces competentevidence, apart from the disputed documents, that would lead a reasonable person to believethat such an examination would reveal that the communications were part of an effort toperpetrate some crime or fraud. First Union Nat. Bank v. Turney, 824 So. 2d 172, 183 (Fla. 1stDCA 2001) (emphasis added). Accord Gutter, 124 F. Supp. 2d 1291, 1307 (“before engaging inan camera review to determine the applicability of the crime-fraud exception, the judge shouldrequire a showing of a factual basis adequate to support a good faith belief by a reasonableperson, that in camera review of the materials may reveal evidence to establish the claim that thecrime-fraud exception applies”). Accordingly, Plaintiff cannot argue that despite the lack ofevidence, a showing of crime or fraud would occur upon disclosure6) Plaintiffs’ Reliance on the Florida Bar Complaint is ImproperPlaintiffs cite to a Complaint filed by The Florida Bar against Charles Neustein, theattorney who served as Paragon’s escrow agent, in support of their claims of fraud. Initially, theFlorida Bar Complaint does not even state that Paragon was fraudulent. Rather, said Complaintmerely makes various allegations regarding Paragon, including, infer alia, that many buyers whoentered into contracts with Paragon ultimately failed to receive title to property or refunds. SeeFlorida Bar Complaint, 943.Plaintiffs’ reliance on the Bar Complaint is misplaced and irrelevant. As an initial matter,the Florida Bar investigation pertained to Charles Neustein and had nothing to do withDefendants. Indeed, there is no evidence that Mr. Neustein was employed by Defendants as hewas never an employee of the Defendant-firm. Moreover, said investigation involved allegedescrow account violations under the Florida Rules of Professional Misconduct as opposed to-13-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32crime or fraud. As such, the Bar Complaint is irrelevant as it was neither a proceeding againstthese Defendants nor the alleged clients, Paragon and Tashman.Moreover, this Court made statements on the records acknowledging that a bar complaintis not evidence:THE COURT: Because you're citing to a bar complaint. A bar complaint isn't evidence ofanything. It's a pleading.MR. HESS: Your Honor, my understanding is that the pleading itself --THE COURT: You can't have a pleading in a pleading and somehow I'm supposed tomake inferences from it. That's not evidence.See Crime-Fraud transcript, 6:5-12, attached hereto as Exhibit 17Consistent with this Court’s statements, “[a]llegations in pleadings are not evidenceand are not sufficient to make a prima facie showing that the crime-fraud exceptionapplies.” /n re Grand Jury Subpoena, 419 F.3d 329, 336 (Sth Cir. 2005). Accord Richmond v.Coastal Bend Coll. Dist., 2009 WL 1940034 (S.D. Tex. 2009) (concluding that the crime-fraudexception did not apply where the plaintiffs submitted “nothing beyond pleadings and allegationsin support of their contention that a crime or fraud occurred”); Jn re Grand Jury Investigation,842 F.2d 1223, 1226 (11th Cir. 1987). Here, Plaintiffs’ Motion heavily relies on the NeusteinFlorida Bar Complaint in support of its allegation that Paragon was fraudulent. However,pursuant to the above-discussed case law and statements by this Court, the allegations regardingParagon in the Bar Complaint are not actual evidence and are insufficient to make a prima facieshowing that the crime-fraud exception applies. Jn re Grand Jury Subpoena, 419 F.3d 329 at336.ii. The Evidence Supports that Paragon, William Gale and StephenTashman were not Engaged in Fraud1) Paragon / William Gale were not a fraud-14-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32Despite Plaintiffs determined attempts to prove fraud, the evidence and findings fromvarious jurisdictions support that Paragon, William Gale and Stephen Tashman were not engagedin fraud. For example, the presiding Judge in the Florida Bar action against Charles Neusteinmake remarks regarding the lack of evidence to prove fraud:“T have had his representation that there will be no evidence, and there is no evidencethat Paragon ever did wrong or fraudulent or anything other than, I gather from whatwas said, ostensibly, a company that was working as hard as it could, but hit a badeconomic stretch on [sic] 08 — °09...”See Transcript of Proceedings Before The Honorable Richard L. Hersch on July 11, 2013,attached hereto as Exhibit 19. Likewise, Alejandro Antillon, the expert in Costa Rican realestate retained by Mr. Neustein in the Florida Bar matter, testified in support of Paragon’slegitimacy as follows...is Paragon Properties a company that owns real estate? They certainly did; a vastamount of real estate. Did they appear to be a business, a rightful business developingreal estate in Costa Rica? They certainly appeared to be that. If they failed, as thousandsof projects in Costa Rica have failed during the crisis, the 2009/2010 real estate crisis, Isuppose, yeah, it could happen.What I can tell you is that everything that I reviewed from Paragon Properties, as anexpert in real estate law and as an expert in the Costa Rican real estate market, led me tobelieve that Paragon Properties was a rightful real estate endeavor and that he [sic]was not, like in other cases I've seen in Costa Rica, you know, ashamed [sic] or acharade, and people were being sold interest in land that didn’t exist. Here, the landexisted. Here, everything suggests that this was an actual real estate development or anactual real estate developer. What happened to it, I don’t know. But they’ re telling - theyseemed to be a legit enterprise between 2004 and 2009, from what I could get frompublic recordsSee Transcript of Unsworn Statement of Alejandro Antillon, dated May 29, 2013, Pages 43-45,attached hereto as Exhibit 4. As set forth above, Mr. Antillon’s opinions were based on hisreview of records and had a clear factual basis. In contrast, the opinions of the expert retained bythe Florida Bar, Carlos Ruga, had no such basis. Specifically, at his deposition, Mr. Ruga couldnot provide any sort of factual basis for his opinion that Paragon was a fraudulent scheme:-15-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32Q ..what evidence do you have that the Paragon company was a fraudulentscheme?A It was.T understand that’s your opinion. But what evidence do you have?Well, the evidence is all the money - all the hundreds of people whohave lost their money, maybe in some millions of dollars. And the placeis closed and there is nothing else.Anything else?That’s itQ: And that’s the factual basis for your opinion that Paragon was afraudulent scheme?A Yeah, in a way.See Transcript of Deposition of Carlos Ruga, dated May 21, 2013, at 56, attached hereto asExhibit 20. Moreover, when Mr. Ruga was asked for the evidentiary basis of his sweepingconclusion that Paragon never owned any Costa Rican property, he could not provide same, andhe admitted that he did not review any land records for Paragon. Specifically, Mr. Ruga testifiedas follows:Q What did you look at or read that made it appear to you that the Costa Ricanproperty was never owned by Paragon?A It appears it was not and that’s what I’m saying. It appears they’re not owned ordeveloped. And it — it is because of how many people got crashed over there andlost all their money over thereAnd that’s the basis?Yes, that’s the basis.Okay. Did you review any land records for Paragon?> OFNot any, not in Costa Rica.See id., at 65. Furthermore, Mr. Ruga was then questioned regarding his claim that there was nodevelopment of the land in Costa Rica, and his testimony was as follows:-16-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32Q No, okay. All right. Now, you’re saying it appears that there was nodevelopment. What evidence did you have that there was no development?A It appears because it crashed, there nothing else anymore.See id. As demonstrated by his testimony above, Mr. Ruga’s opinions consisted of nothing morethan bare conclusions unsupported by a shred of factual evidence.Not only have Plaintiffs failed to show that Paragon was fraudulent, there has been ajudicial finding to the contrary. Specifically, in the Order Denying Plaintiff's Motion for ClassCertification dated June 21, 2012, in Oginski, et al., v. Paragon Properties of Costa Rica, et al.(a case where Mr. Neustein was a Defendant and Plaintiffs’ present counsel was counsel ofrecord to other Plaintiffs), the Honorable James L. King noted the following:Although Plaintiffs make the sweeping allegation that the entire project was a fraud fromthe start, after a year and half of discovery, Plaintiffs have not presented the court withany direct evidence of actual fraud or racketeering. To the contrary, evidence in therecord suggests that the project may not have been a total fraudulent scheme fromthe beginning. For instance, the uncontested evidence reveals that some of theimprovements were completed by Defendants as promised, such as the construction ofgutter systems on 10% of the lots and 20 miles of roads throughout the planned project.(citations omitted). In addition, Defendant Gale submits that 47% of purchasers receiveddeeds to their properties. (citations omitted)See Order Denying Plaintiff's Motion for Class Certification, at 13, attached hereto as Exhibit 1.Judge King’s Order controverts Plaintiffs’ allegation that Paragon was a fraudulent scheme.Moreover, the Order demonstrates that Paragon not only owned actual land, but developed sameand provided deeds to the properties. /d. As such, on its face, Paragon cannot be considered afarce.Plaintiffs also cite to the deposition transcript of non-party, Jo Edda Rosskamp, insupport of their argument that Paragon was a fraud. See Motion, 457. However, on November 2,2011, in previously initiated litigation in federal court, Ms. Rosskamp testified under oath thather written report to Defendant describing her opinions of Paragon and its operations after her-17-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32return from Costa Rica as “ . . . neutral, trending toward the positive.” See 2011 DepositionTranscript of Rosskamp, at 18:14-16, attached hereto as Exhibit 21.Plaintiffs have not provided any evidence, and there is no evidence to date, that Paragonwas fraudulent. Plaintiffs rely on The Florida Bar Complaint, which is not evidence, and is notsufficient to make a prima facie showing that the crime-fraud exception applies. Indeed,“conclusory statements, devoid of any factual support, have no probative value.” Green IslandHoldings, LLC vy. British American Isle of Venice (BVI), Ltd., 2011 WL 3878364 (S.D. Fla.2011). Moreover, “[b]y definition, substantive evidence is that which tends to prove the truth ofthe matter asserted” Ellis v. State, 622 So. 2d 991, 996 (Fla. 1993). Contrary to Plaintiffs’sweeping and unsubstantiated allegations, the substantive evidence in this case proves thatParagon was not a fraudulent scheme.In revisiting the basic elements of fraud, Plaintiffs have not shown evidence of any falsestatements from Paragon pertaining to particular material facts. Plaintiffs have not shownevidence that Paragon knew such representation was false; nor that a false representation wasmade to induce the recipient’s reliance. In addition, Plaintiffs failed to show any injury directlyresulting from misrepresentation by Paragon. Based on the foregoing, there is no actual fraud atissue. As such, Plaintiffs fail to satisfy the first prong of the test to determine the applicability ofthe crime-fraud exception, namely, a prima facie showing of crime or fraud by Paragon.2) Plaintiffs have Failed to show that Tashman was Engaged in Crime or FraudPlaintiffs’ Motion alleges that “Defendants’ services enabled Tashman and Paragon toplan or commit a fraud.” See Motion, 65. Initially, as set forth above, there is no evidence thatTashman’s involvement with Paragon was fraudulent or criminal, and there have been no arrests,convictions, or judicial determinations of crime or fraud with respect to Paragon or Tashman.Plaintiffs broadly claim that Defendants “aided and abetted” Tashman in attempting to-18-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32circumvent an injunction order previously entered against him. See id. In this regard, in 1998, theFederal Trade Commission filed an action against Tashman and others for alleged violations ofthe FTC Act and the Franchise Rule. See id., §2. Defendants represented Tashman in thisproceeding. See id., §2. In 2006, Tashman was enjoined from... engaging, participating or assisting in any manner or in any capacity whatsoever in themarketing, offering for sale, or selling of any franchise, business venture or investment orproviding substantial assistance to others in the marketing, offering for sale, or selling ofany franchise, business venture or investment.See Injunction Order, at 19, attached hereto as Exhibit 14. The Injunction Order went on todefine the terms as follows:a.“Business Venture” is defined as any written or oral business arrangement, howeverdenominated, whether or not covered by the Franchise Rule, that consists of the payment of anyconsideration for:othe right or means to offer, sell, or distribute goods or services (whether or not identifiedby trademark, service mark, trade name, advertising, or other commercial symbol); ando the promise or provision of assistance to any person or entity in connection with orincident to the establishment, maintenance or operation of a new business or the entry byan existing business into a new line or type of business, including, but not limited to,referrals to one or more persons providing location services.“Investment” means any interest, product or services, including any partnership, interest in anypartnership, stock or other beneficial interest, tangible or intangible that in any way is (1) offeredfor sale, traded, or sole, to be held, wholly or in part, for purposes of economic benefit, profit, orincome, or (2) offered for sale, traded, or sole, based on representations wholly or in part, expressor implied, about past or future income, appreciation or resale value.“Franchise” is defined in Section 436.2(a) of the Federal Trade Commission Trade RegulationRule entitled “Disclosure Requirements and Prohibitions Concerning Franchising and BusinessOpportunity Ventures,” (the “Franchise Rule”), 16 C.F.R. § 436.2(a).“Telemarketing” shall mean a plan, program, or campaign which is conducted to induce thepurchase of goods or services by use of one or more telephones and which involves more thanone interstate telephone callId. at 19-20.Plaintiffs arbitrarily asserts that Defendants “knowingly assisted Tashman’s violation ofthe federal injunction and aided Tashman’s misrepresentations to the Federal TradeCommission” See Motion at 5. Plaintiffs’ argument is entirely false and defeated by the swornstatements of Stephen Tashman and Jeffrey Tew, the FTC Injunction Order and filings of TheFlorida Bar.-19-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32The entry of the July 2006 Injunction Order did not require Mr. Tashman’s immediateresignation from Paragon. This is because the Injunction Order only enjoined Mr. Tashman from(i) personally engaging “in the marketing, offering for sale, or selling of any franchise, businessventure or investment” or (ii) “providing substantial assistance to others” in their “marketing,offering for sale, or selling of any franchise, business venture or investment.” See InjunctionOrder, at 20, attached hereto as Exhibit 14. Paragon never sold any “franchise, business ventureor investment,” it only sold Costa Rican real estate. See, e.g., In re Mona Lisa at Celebration,LLC, 472 B.R. 582, 619 (Bankr. M.D. Fla. 2012), affd, 495 B.R. 535 (M.D. Fla. 2013) (grantingsummary judgment for developer because purchase agreements for the sale of real estate are notsecurities as defined under the 1933 Securities Act or under the Florida Securities and InvestorProtection Act). To be clear, there remains no evidence of a violation of the Injunction Order;such as a contempt order.Paragon also never engaged in any “telemarketing” to sell that real estate because thatterm was specifically defined in the Injunction Order as a “plan, program, or campaign which isconducted to induce the purchase of goods or services by the use of one or more telephones.” Seeid. at p. 20. Real estate is neither a “good” nor a “service.” See e.g., Ge Lin v. EcclestoneSignature Homes of Palm Beach, LLC, 59 So. 3d 267, 270 (Fla. 4th DCA 2011) (holding that thestatute of frauds was not a defense to the enforcement of the contract at issue because its subjectmatter was the sale of real estate, not goods); Horowitch v. Diamond Aircraft Indus., Inc., No.606-CV-1703-ORL19KRS, 2009 WL 1537896, at *4 (M.D. Fla. June 2, 2009) (holding that theUniform Commercial Code only governs contracts for the sale of goods, which Florida’s caselaw distinguishes from real estate purchase contracts); Hesson v. Walmsley Const. Co., 422 So2d 943, 946 (Fla. 2d DCA 1982) (holding that a house and lot on which it stands are not “goods”pursuant to the UCC as codified by the Florida Statutes).-20-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32Despite that the Injunction Order did not preclude Mr. Tashman from working atParagon, Mr. Tew, in an abundance of caution, advised Mr. Tashman to transfer to Paragon’sCosta Rican construction affiliate: Costa Rica Land & Development, Inc. (“CRLD”). Mr. Tewthought it prudent and responsible to do his best to ensure Mr. Tashman was neither employedby nor involved with any company that used telephones to market or sell anything. See JeffreyTew’s Verified Response to Kent Smith’s Bar Complaint, at 8, attached hereto as Exhibit 13.Accordingly, on July 25, 2006, Mr. Tew disclosed Mr. Tashman’s new employer to the FTC. SeeDisclosure, attached hereto as Exhibit 22. On January 3, 2007, Mr. Tashman served anAmended Sworn Statement on the regional director of the FTC representing that: (i) he wasemployed by CRLD and (i) he had not engaged or participated in telemarketing since theInjunction Order was entered five-and-a-half months earlier. See Sworn Statement, attachedhereto as Exhibit 23. After 6.5 years, The Florida Bar acknowledged the accuracy of Mr.Tashman’s sworn testimony when its July 10, 2013 Supreme Court filing conceded that “Therehave been no allegations by the FTC that Mr. Tashman’s involvement with Paragon has violatedthe [Injunction Order].” Accordingly, Stephen Tashman did not violate the FTC Injunction Ordernor was he engaged in a fraud related to Paragon.In support of their arguments, Plaintiffs cite to page 40 of the deposition transcript ofnon-party William Gale who was the President of Paragon. See Motion, §48 n. 24. However, Mr.Gale did not testify that Tashman came up with the idea for Paragon or was its marketingmastermind. Rather, Mr. Gale testified that Tashman was the mastermind for a previous businessinvolving an ostrich farm (formed in 1987). See Deposition of William Gale in Federal Action, at40-41 attached hereto as Exhibit 24. What is more, Mr. Gale testified that the idea that Tashmanwas the one behind Paragon was an “illusion.” See id. at 47. Therefore, Mr. Gale’s depositiontranscript contradicts Plaintiffs’ position in this regard-21-COLE, SCOTT & KISSANE, P.A.ESPERANTE BUILDING - 222 LAKEVIEW AVENUE, SUITE 120 - WEST PALM BEACH, FLORIDA 3301 (561) 383-9200 - (561) 683-8977 FAX,Case No. 13-17671 CA 32With respect to Plaintiffs’ allegation that Defendants held out William Gale as thePresident/CEO of Paragon in order to conceal Tashman’s involvement, Plaintiffs offer noevidence whatsoever in support of same. See Motion, §]48. In fact, the evidence disproves thisnotion. Specifically, at his June 26, 2012 deposition in the Oginski matter, Mr. Tew testified thathe and Tashman met with the Assistant Attorney General in charge of the FTC division and theUSS. Postal Service to provide them with notice regarding Paragon’s land sales so that they couldbe informed if any issues arose. See Deposition of Jeffrey Tew, at 16-17, attached hereto asExhibit 25. Mr. Tew further testified that neither HUD, the FTC, the DOJ, or the USAO havetaken any action regarding Paragon. These meetings with regulatory authorities disabuse thesuggestion that Defendants intended to conceal Paragon or Tashman from regulatory authorities.There is categorically no evidence that Defendants enabled Tashman to engage in fraudby aiding him in attempting to circumvent the FTC i 

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