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NATURAL WEALTH LAWSUIT


AMENDED COMPLAINT
& LYNCHS SUMMARY OF FACTUAL
ALLEGATIONS & STATEMENTS
Natural Wealth Real Estate, Inc., et al. v. Leonard Cohen, et al.
Case No. Case 1:05-cv-01233-LTB
I, Kelley Lynch, agree with the following factual statements and was a witness
to much of what was addressed in Natural Wealths Amended Complaint
(Denver District Court, Case No. Case 1:05-cv-01233-LTB). Therefore, Neal
Greenberg, and other Plaintiffs, and I are in agreement with respect to the
following facts. See Amended Complaint & Exhibits attached hereto and made
a part hereof. Kelley Lynch opposes all statements raised in Greenbergs
Complaint that are not contained in the following excepts taken directly from
the Amended Complaint.
Dated: 12 March 2015

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___________________________________
Kelley Lynch
See Related Case File BC341120 (Ex Parte Application in Intervention for
Order Protecting & Preserving Documentary Evidence; Natural Wealth August
2, 2005 Complaint attached thereto as Exhibit A.)

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Natural Wealth Real Estate, Inc., et al. v. Leonard Cohen, et al.

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AMENDED COMPLAINT AND JURY DEMAND

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NATURE OF THE ACTION

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This action is brought by three Colorado registered investment advisors, a


licensed broker-dealer, and a principal in each of these firms. Plaintiffs perform
advisory and financial services, including the direction of investment strategies,
on behalf of hundreds of clients, most of whom are citizens of Colorado.
By this action, Plaintiffs are compelled to seek legal recourse against a common
client who, for wrongful purposes, has set out to besmirch and damage
Plaintiffs hard-earned professional standing through the publication of
knowingly false and highly damaging statements, and through the assertion of
sham claims.
Defendant Leonard Cohen (Cohen), a noted recording artist, acting directly
on his own behalf, and through his agent and attorney, Robert Kory (Kory),
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has threatened to take or has taken, improper and unlawful actions, including
bribery and intimidation of a witness [Kelley Lynch], subornation of perjury,
defamation, disparagement
These acts were not isolated, but all in furtherance of an improper and unlawful
scheme to extort and recover from Plaintiffs and their insurers losses allegedly
sustained by Cohen that, if they even occurred, were solely the result of
Cohens own exorbitant spending, his own neglect and mismanagement of his
financial, legal and personal affairs
Cohens extortion scheme was eventually exposed by Lynch and ultimately
frustrated
Detailed allegations of Cohens scheme to commit extortion against Plaintiffs,
his fraudulent statements and actions in furtherance of that scheme, and other
tortious conduct, and Plaintiffs damages and prayer for relief flowing
therefrom, are set forth below.
In addition, Cohen has made clear that he asserts rights over certain
investment funds that belong to Traditional Holdings, LLC (Traditional
Holdings), a dissolved Kentucky entity that was managed and 99.5% owned by
Lynch and 0.5% owned by Cohen.

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GENERAL ALLEGATIONS

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Cohen and Lynch

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18. Cohen is a songwriter and singer who has been, and continues to be, a well
known celebrity.
19. Lynch was Cohen's [personal] manager and agent for approximately 20
years, until late 2004.
20. Throughout this 20-year period, Lynch handled Cohen's business affairs and
much of his personal affairs.
21. Throughout their 20-year relationship, Cohen repeatedly affirmed to the
public and to those working on his business affairs (including, but not limited
to, those working on his recordings, sales and investments) that Lynch handled
these affairs on his behalf, and that they were to treat Lynch as his exclusive
agent and representative. He provided her with various special and durable
powers of attorney to those ends.
22. Since at least 1995, and at least until late 2004, Cohen maintained
business addresses in Los Angeles, California. Cohens mailing address was 419
Larchmont, Suite [88], Los Angeles, California 90004 (the Larchmont
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Address). The Larchmont Address is a post office box only. [Suite 91 was
Lynchs management company address.]
The First Sony Sale
24. As a result of Cohen's success as a songwriter and singer, and under
Lynchs management, Cohen generated millions of dollars worth of royalties
and other intellectual property assets (together, Cohen's IP or IP).
25. From the early 1990s, impressed with a new strategy used by other
Hollywood celebrities to cash in on their future revenue streams from IP rights
and increase short-term income (called a "Pullman" or "Bowie" bond, after the
artist David Bowie who first used it), Cohen worked aggressively with
advisors, including Greg McBowman, to auction off portions of his IP to the
highest bidder.

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26. In or about 1996, representing that certain of these IP interests were held
by a shareholder corporation of his creation named Leonard Cohen Stranger
Music, Inc. ("Stranger"), Cohen commenced negotiations to sell Stranger to
Sony Music International (Sony) for $6.3 million (the First Sony Sale).

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27. Cohen directed Lynch to be involved in every aspect of the negotiations


and proposed sale on Cohens behalf.
28. Anticipating the influx of funds from the First Sony Sale, [Cohen] sought
investment advice from TAS and others.
TAS/Greenberg Discussions with Cohen
34. Cohen [had a] first meeting with Greenberg in 1996 to discuss Cohens
investment options for the proceeds from the anticipated First Sony Sale.
35. During this meeting, and at Cohens request, Greenberg suggested ways in
which Cohen could structure the investment of his proceeds from the First
Sony Sale so as to reduce tax consequences and generate substantial income.
36. Greenberg, however, is not an accountant or a tax lawyer. Rather, Cohen
worked with, and began to be represented by, a creative tax attorney and law
professor from the University of Kentucky, Richard Westin (Westin). Cohen
also had other advisors and consultants working with Lynch on his business,
music and tax matters, including Greg McBowman and Ken Cleveland, as
well as Stuart Fried and other attorneys at the law firm of Grubman Indursky &
Schindler, P.C.
Cohens Creation of the Charitable Remainder Trusts

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37. Ultimately, Cohen decided to transfer some of the income from the First
Sony Sale into charitable remainder trusts. On October 30, 1996, Cohen
established [two charitable remainder] trusts: the Sabbath Day Charitable
Trust (the "Sabbath Day Trust"), the Cohen Family Charitable Trust (the "Cohen
Family Trust")
38. Approximately $5 million of the proceeds from the First Sony Sale was
transferred to the Trusts. Cohen contracted with TAS to invest the Trusts
assets.
39. These Trusts significantly decreased Cohens up-front tax exposure, and
also enabled him to draw down considerable funds to maintain his extravagant
"celebrity" lifestyle.
40. Cohen's consistent and prolific spending. Cohen repeatedly withdrew
large amounts of the Trusts assets. On repeated occasions, TAS notified Cohen
that Cohen was spending more than recommended. On one such occasion,
on April 13, 2001, Greenberg, on behalf of TAS, wrote to Cohen:
I am writing to you to discuss the income withdrawals youve received from
your portfolio and to provide you with some helpful guidelines for the future.
When we originally constructed your portfolio in 1997, you may remember that
we had extensive conversations about how much you required for your annual
living expenses. Accordingly, we budgeted for withdrawals of $300K/year.
[Cohen through] Lynch has assured me that much of this money went towards
business investments that will provide you some return in the future. . . . At
your current rate of withdrawals, you may continue to spend down your
investments. . . . . Please feel free to contact me anytime at (303) 440-6500
should you have any additional questions or concerns.

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41. Cohen responded to these warnings with additional demands for money,
or with complaints about the message. For example, during a telephone
conversation with Greenberg in June 2000, Lynch asked that TAS stop saying
that Leonard is spending too much. Leonard would be really offended to hear
this. Expenses are higher right now due to withholding of royalties and
expenses associated with [the] new album.

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The Second Sony Sale

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42. Cohen [continue to pursue] IP [sale/loan deals]. In 1999 [through 2001],


Sony and Cohen negotiated for a second sale of IP to Sony for about $8
million (the "Second Sony Sale"). The artist royalties to be sold were
represented by Cohen as being held by another Cohen entity, Blue Mist Touring
Co., Inc. ("Blue Mist"). Cohen was the Chairman, President, and majority
shareholder of Blue Mist, owning 425 shares, while Lynch was the Assistant

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Secretary and minority shareholder of Blue Mist, owning 75 shares, or 15% of


the company.
44. Cohen asked Westin, and in the spring of 2000, Greenberg, to provide
advice about how to invest the anticipated proceeds from the Second Sony Sale
and minimize the sales tax burden.
45. In June 2000, Greenberg, on behalf of Greenberg & Associates, Inc.
(Natural Wealth), prepared a memorandum to Cohen explaining certain tax
avoidance issues and comparing different investment scenarios.
46. In the memorandum, Greenberg compared and contrasted the benefits and
disadvantages of different investment options, including creation of additional
charitable trusts and investment in government tax-free bonds.
Cohen and Lynchs Creation of Traditional Holdings
47. Cohen rejected these options proposed by Greenberg on behalf of
Greenberg & Associates, Inc. However, still seeking a means of avoiding
personal income tax stemming from the sale, Cohens tax attorney Westin
[and others including Greenberg] investigated other tax-friendly business
structures.
48. While Lynch [Cohen] or Westin would telephone Greenberg occasionally to
pick his brain about these issues, and while Cohen signed a letter affirming
that Greenberg had been retained in connection with Westins legal services,
such that he stood within any applicable attorney-client privilege
49. While Westin advised Cohen that he could help save a few tax dollars at the
margins with a conservative approach, he also presented Cohen with an idea
for starting a company, with Lynch, that would become the counterparty to
Sony for the IP sale, and would in turn owe a long-term annuity obligation to
Cohen.
50. Cohen leapt at this opportunity to minimize his tax burden, just as he had
explored all possible means of reducing his taxes in years past, such as by
seeking a tax credit for donating his papers to a Canadian [library], and using
artifices in dealing with Sony to avoid paying any Canadian taxes (as a
Canadian citizen) on his royalty income earned in Canada.
51. According to Westins proposal, Cohen would not be involved in the IP sale
personally and, therefore, would not owe taxes personally in the short-term, but
would defer his tax obligations until the annuity payments started some years
later. That way, he could sell off much of his songwriting credits and royalty
rights up front for a hefty lump sum, yet pay lower taxes on a reasonable
schedule, and at lower rates, years later.
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52. Westins proposed plan had the following basic components: a limited
liability company which eventually became Traditional Holdings would be
created. Blue Mist would transfer certain IP assets to Traditional Holdings in
exchange for a deferred annuity, to be paid to Cohen beginning in about 10
years. Traditional Holdings would then sell the assets it received from Blue
Mist to Sony. The tax plan prevented Cohen, the annuitant, from owning more
than a de minimis interest in Traditional Holdings. Therefore, Cohen would own
less than 1%, and another person who ultimately was Lynch would own the
remaining LLC interest (more than 99 percent).
53. Westin outlined this proposal to Cohen and Lynch both orally and in a series
of letters and other written communications between October 2000 and
December 2000. See, e.g., Exh. 1 attached.
54. In these written communications, Westin explicitly warned Cohen that since
the annuity plan gave significant transactional control to Lynch, and also
potentially placed tax and other burdens upon her as majority shareholder, the
plan would work only if Cohen and Lynch maintained (as they had in the past) a
long-term relationship of personal and professional trust which would secure
their mutual obligations as manager of the obligor (Lynch) and annuitant
(Cohen). See, e.g., Exh. 2 attached.
55. Cohen carefully reviewed, understood, and signed off on the ownership
structure of Traditional Holdings including the fact that Lynch would own 99
percent of Traditional Holdings membership interests, so as (among other
reasons explained by Westin) to avoid any suggestion of self-dealing.
56. First, Cohen reviewed the Traditional Holdings Articles of Organization,
and reviewed and executed the Traditional Holdings Operating Agreement,
which set forth in detail the entitys ownership structure and managerial
procedures. See, Traditional Holdings Articles of Organization and Operating
Agreement (Exh. 3 attached).
57. Second, Cohen participated, at his request, in conference calls with Westin
and Lynch and Greenberg during which the structure was carefully
reviewed.
58. Third, Cohen talked about the structure of Traditional Holdings privately
with Lynch, including when he forced her to discuss it with him while he took a
bubble bath.
59. Fourth, in addition to several explanatory faxes he received from Westin
describing Traditional Holdings, Cohen communicated specific questions
relating to Traditional Holdings ownership and transactional structure, which
questions Westin answered in a letter written directly to Cohen on December 4,
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2000, and faxed (as with his prior memos) directly to Lynch and Cohen. See,
Exh. 2.
60. Moreover, regardless of whether Lynch owned 1 percent or 100 percent of
the shares of Traditional Holdings, Cohen knew or should have known that she
had or came to have authority through a durable power of attorney and
pursuant to her role as Traditional Holdings manager to act, and give
directions, on Traditional Holdings and on his own behalf. See, e.g., Exh. 3.
61. Likewise, no matter who owned the majority of shares of Traditional
Holdings, the obligation to fulfill a deferred annuity obligation to Cohen
remained the same. Thus, Cohen's interests in the firm (the long term annuity
payments) were identical, no matter how his purported ownership interest in
the assets were held and invested in the interim.
62. In December 2000, Westin created Traditional Holdings as a Kentucky
limited liability company. Lynch was named as the initial manager in the
Articles of Organization, and both Cohen and Lynch were appointed as
managers in the Operating Agreement. Id. Also in December 2000, Cohen
signed a Private Annuity Agreement with Traditional Holdings which document
sets forth Traditional Holdings annuity obligations to Cohen. See, Private
Annuity Agreement (Dec. 7, 2000) (Exh. 4 attached). Lynch signed the Private
Annuity Agreement on Traditional Holdings behalf. Westin maintained, and
continues to maintain, that the company and its annuity contract with Cohen
are legitimate under prevailing interpretations of the federal tax code.

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63. To purchase her ownership interest in Traditional Holdings, Lynch was


required to submit to Traditional Holdings a promissory note for $240,000. It
was agreed that Lynch would receive a salary and/or distributions from
Traditional Holdings sufficient to pay down the $240,000 promissory note and
to cover tax liabilities. See, Exhs. 2 and 3.
64. As set forth in the Operating Agreement, Traditional Holdings was
authorized to issue loans to its members, Cohen and Lynch, as long as the loans
were paid back before the annuity obligations commenced [and, in Cohens
case, per the Annuity Agreement, his loans/advances were to be repaid in 3
years]. See, Exh. 3.
66. Cohen hired TAS for the purpose of investing the assets that Traditional
Holdings would receive from the Second Sony Sale.
The Closing of the Second Sony Sale
67. Between December 2000 and April 2001, Traditional Holdings remained
unfunded pending the closing of the Second Sony Sale. During that time period,

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Sony completed its due diligence and approved Traditional Holdings role in the
Second Sony Sale.
68. In April 2001, the Second Sony Sale was completed. The gross proceeds of
the Second Sony Sale were approximately $8 million, less certain identified
costs, expenses, and holdbacks for undelivered work.
69. Of these proceeds, Cohen had already requested and received $1 million as
an advance in November 1999. Cohen was well aware of this $1 million
advance because it became the subject of a tax dispute with the Internal
Revenue Service in 2002. However, Cohens accountants [Westin and others],
including Ken Cleveland, managed to avoid the consequences of this tax
dispute, by convincing Sony to withdraw and reissue its 1099 in the amount of
$0.
70. Of the remaining proceeds of the Second Sony Sale, approximately $6.65
million was delivered to Traditional Holdings. Of this $6.65 million, the
following amounts were paid to cover the [Cohens] costs involved in closing
and negotiating the Second Sony Sale:

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$350,000 Grubman Indursky & Schindler, P.C. (attorneys for Cohen)


$333,750 McBowman Consulting Group (consultants for Cohen)
$30,450 Epstein Backer & Green, P.C.
$1,101,250 Stranger Management

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[NOTE: See additional amounts listed in Cohens Complaint, Clause 61.]

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None of these listed expenses had anything to do with either the formation of
the annuity plan or
with Traditional Holdings dealings with TAS or any other Plaintiff. Westin did
receive a modest fee for his work on the Traditional Holdings documents, and
for consulting with Sony on Cohen[s] behalf

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Investment of Traditional Holdings Assets


71. Pursuant to Cohen[s] direction, Traditional Holdings assets, i.e., the
remaining proceeds of the Second Sony Sale (less than $5.0 million), were
initially allocated among different outside funds and accounts, some of which
had the purpose of generating investment returns, and others of which were
intended to maintain liquidity in the event Cohen required money to cover
expenses.
72. On January 31, 2002, Cohen executed an extremely broad Durable General
Power of Attorney that gave Lynch the [authority] to: act in Cohens name
and place; take full charge of and conduct all of Cohens affairs; have the
broadest possible power over Cohens property; make, sign, execute, and
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deliver contracts and agreements; and transact business of any kind or class on
behalf of Cohen. See Durable General Power of Attorney (Jan 31, 2002) (Exh. 5
attached).
Communications with Cohen and Lynch Regarding Traditional Holdings
and the Trusts
75. [Following the 2001 close of the Traditional Holdings, LLC deal] Agile
Group, LLC began to send official monthly statements to Cohen at the
Larchmont Address (the record address for Traditional Holdings) setting forth
the performance of the Traditional Holdings funds invested in the Agile Safety
Fund. See, e.g., Exhibit 6 (example of monthly statements sent by independent
outside administrator). In addition, Agile Group, LLC sent monthly [emails] to
Cohen which, as a courtesy, summarized [the asset valuation of Traditional
Holdings, LLC].

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76. TAS continued to send full monthly financial statements by first class
mail to Cohen that included reports on all accounts in which he held an
interest, direct or indirect, including the Trusts and Traditional Holdings. Id.
(example of monthly financial statements sent by TAS)

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Cohens Continued Overspending


78. No sooner had Traditional Holdings been funded, however, than Cohen
just as he had done with the Trusts assets from the First Sony Sale, and
notwithstanding Greenbergs prior warnings about draining down investment
money began to dissipate the Traditional Holdings funds, jeopardizing his own
long-term annuity interests, as well as the companys legitimacy. Greenberg
and others were immediately alarmed by Cohen's desire and tendency to treat
this company like his own personal piggybank, out of which he could borrow or
take distributions against his annuity benefits.
79. For example, almost immediately after the funding of Traditional Holdings,
Cohen took out a loan for $50,000. This was followed, during 2001 and 2002
alone, by several loans to Cohen to cover tax liabilities, houses for Cohen's
son and his current girlfriend, and living expenses. These 2001-2002 loans to
Cohen amounting to over $1 million were deposited directly into Cohens
personal bank account at City National Bank in Beverly Hills, California.
80. In March 2002, on one of the few occasions when Greenberg [spoke] with
Cohen directly by telephone, Cohen admitted he was spending too much and
seemed a little shaken when [Greenberg] reminded him how much he had just
spent on gifts to friends."
81. Lynch repeatedly assured Agile Group, LLC and TAS that the loans from
Traditional Holdings [should be or should have been] documented [by Cohen
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and his tax lawyer] Westin. Cohens tax attorney Westin also was aware of and
in regular communication with [Cohen, Greenberg, Lynch, and possibly others]
concerning the shareholder loans and other aspects of the affairs and
management of Traditional Holdings.
82. The March 5, 2002 Traditional Holdings Board Meeting Minutes, prepared
[by Westin], state that the level of borrowing was undesirable and [the
members] expressed their assent that further borrowing was discouraged, even
though the borrowers [Cohens] credit and collateral were good.
83. Cohen, however, gave no sign that he had any intention of abating his
spending habits. In an e-mail to Lynch dated March 4, 2002, Cohen thanked
Lynch for keeping [him] informed, and instructed her to give lots of money
to everyone.
88. Because these shareholder loans were to be repaid, and because it was
necessary to protect the entitys integrity for tax purposes, these shareholder
loans were properly characterized, on Cohens tax attorney Westins [and
Greenbergs] advice, as Traditional Holdings assets when calculating the
entitys value.

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Agile Group, LLCs and Greenbergs Continued Warnings to Cohen


In one of these [IRS] warning letters, dated January 16, 2004, Greenberg
notified Cohen that: (a) Traditional Holdings had only $2.1 million in remaining
capital; and (b) considering how quickly Cohen was spending money, "I think
you should consider your situation quite desperate." The letter continued: [A]t
the rate funds are being withdrawn, you will run out in a few years . . . . If you
spend all of the capital, you would be destitute except for the income from the
charitable trusts and any income from your music. I URGE YOU TO CURB
YOUR SPENDING. It is at a very dangerous level. See, Letter from N.
Greenberg to L. Cohen (Jan. 16, 2004) (Exh. 7 attached).
92. Greenberg followed this letter with an e-mail to Lynch seeking to confirm
that Cohen received and understood the letter, and requesting an opportunity
to sit down with Cohen personally to discuss these issues. Lynch responded
that the letter had been received and was understood by Cohen.
93. On June 25, 2004, Greenberg sent Cohen yet another letter, via Federal
Express, that contained even more dire warnings. The letter against notified
Cohen that his situation was getting quite desperate. The letter stated:
Since my last letter of January 16, 2004, you have taken additional withdrawals
amounting to $1,170,000 from Traditional Holdings . . . I want to nag you once
again about two issues you should be concerned about. One is your spending
rate and how little capital is left remaining . . . . I AGAIN STRONGLY URGE
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YOU TO CURB YOUR SPENDING OR YOU WILL OUTLIVE YOUR MONEY. See,
Letter from N. Greenberg to L. Cohen (June 25, 2004) (Exh. 8 attached).
Greenberg [evidently so concerned actually stood Cohen up after confirming
that he would fly into] Los Angeles to discuss Cohen's "quite desperate"
situation with him personally. Id.
The Pending Third Sony Sale
95. Lynch [gave] assurances that [Westin advised her that he would document]
all loans [with promissory notes] and assur[ed] that they would be paid off
when Cohen received the money from another, upcoming Sony transaction
[album delivery, tour, lithograph deal, etc.]
96. Indeed, beginning in 2003, Cohen (through Lynch) informed Plaintiffs of yet
a third sale pending to Sony (the Third Sony Sale)

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97. According to [projected figures], the Third Sony Sale [should] result in
upwards of $7.8 million
98. As part of Cohens preparation to close the Third Sony Sale Westin
prepared loan schedules for the payback of the Traditional Holdings loans from
2001 and 2002 and forwarded those schedules to Agile Group, LLC and TAS.
99. In October 2004, Cohen and Lynch had a major falling out, the details of
which remain unknown to Plaintiffs. As a result of this falling out, the Third
Sony Sale which appeared to be on the verge of consummation never
happened.
100. On October 21, 2004, [according to Greenberg] Cohen personally
contacted Greenberg by e-mail and informed him that Lynch was busy with
other aspects of [his] career, and therefore, Cohen had relieved her of all
financial responsibilities. Cohen further stated that Lynch need not be copied
on your statements or reports, and that Cohen's new accountant would be in
touch.
101. On October 22, 2004, Cohen sent another e-mail to Greenberg stating that
Lynch no longer represents me, and directing Greenberg not to respond to
any of her instructions. Cohens letter of termination [sent to Lynch after her
lawyers letter was received by Westin and Cohen] to Lynch was, according to
Lynch, backdated to precede the release of Cohen's most recent album, "Dear
Heather."
102. On or about October 24, 2004 [according to Greenberg], Cohen again
communicated directly with Greenberg by e-mail, stating that his business
address was no longer the Larchmont Address or Keniston Address. With
allegations flying fast and furious from Cohen and later Kory that Lynch was
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acting without due authority from Cohen, remarkably, a request to change


Cohen's record address was left on Plaintiffs general voice mailbox by Anjani
Thomas. Only later did Plaintiffs learn the identity of Ms. Thomas Cohens
current girlfriend, and Korys ex-wife. Thus, Plaintiffs demanded an original
signature from Cohen on a document verifying the new address.
103. On October 24, 2004 [according to Greenberg], Agile Group, LLC
communicated with Westin Cohen's attorney who had created Traditional
Holdings and inquired: Does Leonard in your view have equal authority over
the accounts that we manage? What if there are contradicting directive on
those accounts that we manage? For example if KL says 'take money out' and
LC says dont take money, what is your view . . . . Westin confirmed that
because Cohen held a membership interest in Traditional Holdings, Agile
Group, LLC could share information with him about Traditional Holdings
investments. Westin could not, however, answer the issue of conflicting
directives, and instead referred Agile Group, LLC to Traditional Holdings'
governing documents (drafted by Westin), which documents provided little, if
any, guidance on the issue.
104. At or about this same time (October 22-24, 2004) [according to
Greenberg], Cohen phoned Greenberg. Cohen said that he thought Lynch had
been taking money from Traditional Holdings without Cohen's authorization.
He claimed that Lynch was using the money to support a gigolo and to fund
shopping sprees at Neiman Marcus, and suggested that Lynch and Westin may
have colluded to defraud him. When Greenberg reminded Cohen that Westin
had warned Cohen in 2000 that "the biggest risk" from Westin's tax avoidance
plan "was that Lynch would own his assets and he would have lost control,"
Cohen stated that he recalled that initial warning.
105. Cohen [according to Greenberg] also represented to Greenberg for the
first time that Cohen had never received any of Greenberg's written warnings
about his excessive spending, and that Lynch "must be intercepting his mail."
According to Lynch, however, Cohen regularly visited his management offices,
often in Lynchs presence, and reviewed and discussed his mail with her, all of
which was kept on his desk to facilitate such review, including all
correspondence, reports, and statements from the Agile Safety Funds
independent, outside administrators, and from Plaintiffs.
Cohen Brings in Kory
106. Cohen then turned to his agent and attorney Kory to deal with Lynch,
Westin, and Plaintiffs.
110. Based on these checks, Agile Group, LLC calculated that, of the loan
money withdrawn from Traditional Holdings:

- 12 NATURAL WEALTH: SUMMARY OF FACTUAL ALLEGATIONS

a. $2,084,518 had been deposited into Cohens own personal bank account;

d. Approximately $2.5 million in loans represented by Lynch as necessary to


cover Cohens personal and business expenses had been transferred to a
Traditional Holdings checking account

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Cohen and Korys Scheme to Extort Money From Plaintiffs


111. [According to Greenberg] late October 2004, Cohen wholly blamed
Lynch for the depletion of the Traditional Holdings accounts Kory also stated
that Cohen doesnt deny he gave Lynch total authority to act on his behalf
114. [According to Greenberg] Cohen was keenly aware that pursuing
Lynch was a risky, and likely counterproductive, proposition. For example:
a. Her abrupt termination frustrated Lynch's ability to make good on any loans
through her share of receipts from the Third Sony Sale, the "Dear Heather"
album, a pending sale of original lithographs, or other sources, and left her in a
precarious financial position;
c. In November 2004, Lynch was asked by [Cohen] to appear without the
benefit of counsel at a meeting with Cohen and Richard Cisneros of the
[Greenberg, Glusker] law firm acting as legal counsel for Cohen, and to
[according to Greenberg as Lynch was never told this] sign certain legal
documents related, inter alia, to unwinding Traditional Holdings, on the spot.
Lynch refused to do so without benefit of counsel, and [according to Greenberg
but not Lynch] subsequently received advice from a variety of legal, accounting
and tax professionals, including but not limited to Mike Taitelman, Dale
Burgess, Dianne DiMascio, and an IRS officer named Betzer [Agent Bill
Betzer Lynch never discussed this matter with Agent Betzer from what she
recall; however, Cohen & Kory were aware that, on April 15, 2005, Lynch
reported the allegations of Cohens criminal tax fraud to Agent Betzer], that she
was wise not to sign, because such action could have been fraudulent.
According to Lynch [who communicated directly with Boies Schiller on these
matters, documenting everything in emails at the time] , and upon information
and belief, such possible improprieties included, but were not limited to, the
retention by Blue Mist and other persons or entities of IP that should have
passed through Traditional Holdings to Sony, the failure to reference or
disclose the annuity obligation [extinguished, as Greenberg understood, from
the 2003 federal TH tax return], [Leonard Cohens] loan obligations, and other
important matters on Traditional Holdings corporate tax returns, and
Cohens failure properly to document Traditional Holdings transactions;
d. Lynch claimed that she had substantial [and provided Boies Schiller with
evidence to review proving these facts], unsatisfied interests in Cohen's
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business entities and/or intellectual property. [According to Greenberg] If


Cohen were to attempt to recover money from Lynch, she would likely assert
counterclaims alleging that Cohen owes her, and has never paid, substantial
amounts of money; and
e. [According to Greenberg] Lynch had intimate knowledge of all of Cohen's
legal, personal and financial affairs that certain financial and personal
improprieties would prove embarrassing to Cohen's carefully-cultivated public
persona, and would become public knowledge should Cohen and Kory cause
them to become at issue by pursuing her
115. [According to Greenberg] Because any attempt to recover money from
Lynch was likely to be both futile and treacherous, Cohen, Kory, and other
unnamed co-conspirators (including Steve Lindsay, Betsy Superfon, and John
Doe Nos. 1-25) conspired

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119. [According to Greenberg] On November 5, 2004, Cohen began this


campaign of extortion by asking Greenberg over the telephone to see whether
Plaintiffs insurance policies covered him, and whether he could use the
insurance to make some kind of settlement of these issues. He told Greenberg
to "be a man" and contact his insurance company.
120. [According to Greenberg] Two days later, in a November 7, 2004 e-mail
from Cohen, Cohen re-emphasized that it would be easier for him to recover his
alleged losses through Plaintiffs and their insurers stating: Please do talk to
the insurer. A great deal of suffering can be avoided.
121. [According to Greenberg] Cohen with affirmative support from Kory, Steve
Lindsay and Betsy Superfon, and John Doe Nos. 1-25, all acting toward a
common end and each for his or her own purposes, began to direct an extortion
[scheme]
122. [According to Greenberg] Cohen and Kory indicated that, unless Plaintiffs
obtained insurance funds Cohen would go out on tour to promote his new
album, and would give interviews to reporters in which he would state or
insinuate that he was touring because he had been bankrupted by the
improprieties of his financial advisors.

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Cohen and Kory Had Substantial Motivation to Pressure Lynch to Join


Their Conspiracy
124. Cohen and Kory began to pressure Lynch to assist in the extortion scheme
against [Cohens representatives including, but not limited to, Neal Greenberg,
Richard Westin, Greg McBowman, Arthur Indursky, Stuart Fried, Don
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Friedman, and Ken Cleveland]. Specifically, they requested that she falsely
testify that [Cohens representatives defrauded him, engaged in fraud in the
inducement, etc.] Cohen sought to obtain this testimony from Lynch
125. Lynch's cooperation in Cohens extortion scheme was critical. [According
to Greenberg] Cohen believed that he could not only could use Lynch as a
witness against Plaintiffs, but could also buy or coerce her silence as against
himself at the same time
126. Thus, [according to Greenberg] Cohen pressed for private "mediation" as
an alternative to a public lawsuit, knowing full well that with Lynch's
cooperation and silence, many of the critical documents [would be concealed]
his aggressive tactics to avoid taxes at all costs, and his desire to capitalize on
and benefit from all of his intellectual property during his lifetime to fuel an
extravagant lifestyle would not be the subject of discovery. Thus, his
phony allegations would stand unrebutted.
127. Thus, by deliberate misrepresentations and omissions of critical
facts Cohen could knowingly and deliberately misrepresent his
objectives long history of aggressive tax management

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128. For example [according to Greenberg], Cohen affirmatively


misrepresented to Plaintiffs that Lynch had simply forged his signature on
various documents, knowing full well that she had not done so, or had signed
with his full authority

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129. [According to Greenberg] Cohen likewise falsely asserted that at no time


had he authorized any of the shareholder loans from Traditional Holdings, and
made various [false] accusations against Lynch for which he had no basis in
fact, all in a knowing effort to falsely implicate [others and conceal his own
wrongdoing] As one example, he claimed never to have known, prior to
November 2004, that Lynch was the majority shareholder of Traditional
Holdings
130. [According to Greenberg] starting in March 2005, Cohen began to
assert that Plaintiffs were responsible for the loss of $8 million, which figure
included many millions of dollars which they knew Cohen had, in fact,
received and previously spent
132. [According to Greenberg] In short Cohen planned to assert knowingly
false claims against [others] in an effort to recover alleged losses (including the
money Cohen himself undeniably received and spent) from Plaintiffs and their
insurance carrier. Having garnered the support of Lynch's then-attorney,
Dianne DiMascio (DiMascio), Cohen felt confident enough in January 2005 to
misrepresent to Plaintiffs counsel, through Kory, that Lynch was then of the

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view that she, along with Cohen, was a victim of the misconduct of Plaintiffs
and Westin. While Cohen hoped that Lynch would support [him].

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Cohen and Kory Exert Economic Pressure and Emotional Intimidation to


Seek Lynchs
Participation in Their Extortion Scheme
133. Cohen and Kory continually sought to purchase or coerce Lynchs
cooperation [including by offering to pay her monies due her for services
rendered and confirming her 15% ownership interest in intellectual property
and offering her 50% community property] in the scheme to extort money from

134. In [response to Dale Burgess recommendation of September 2004] Lynch


had retained DiMascio [& Berardo] as her attorney.

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135. In a demand letter from Kory to DiMascio, Kory wrote: I want to


reemphasize my position that I am willing to work with you as part of a
settlement between Mr. Cohen and Ms. Lynch in going after Westins and
Greenbergs insurers as a source of restitution.

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136. Thereafter, on January 11, 2005, Kory wrote to DiMascio, telling her that
[former Los Angeles District Attorney Ira Reiner believed] properly framed
letters to Greenberg and to Westin would cause their insurance companies to
show up.

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137. Cohen and Kory then scheduled a meeting with DiMascio, with Kory
proposing that Cohen and Lynch both be present to endorse a final agreement
and secure full cooperation. [Lynch, as she had consistently done since
parting ways with Cohen refused to attend any meeting where he would be
present.]
138. Lynch declined to attend the meeting in person. Instead, DiMascio went to
the meeting on Lynchs behalf in early February 2005, after which she reported
to Lynch: [Cohen and Kory] want your cooperation in pursuing [the Plaintiffs]
and Richard Westin
139. Repeatedly, from at least November 2004 through April 2005, Kory made
known to Lynch, directly, through counsel, through Steve Lindsay (the father of
Lynchs youngest child and one of Cohens record producers), through others
that he had extraordinary negotiating authority from Cohen to "forgive" any
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obligations of Lynch, to treat them as a gift, to make additional payments to her


or her family members (including, according to Greenberg, disguised as
"palimony" ), to make good on Lynch's shares of IP rights or legal entities
140. Kory tried to do this directly in late spring 2005 when he met Lynch for
lunch and tried to persuade her to work with Cohen to "go after" Plaintiffs [and
Cohens other representatives].
141. Cohen and Kory also worked indirectly. For example, they recruited [a]
"friend" of Steve Lindsay, Betsy Superfon, a person of some notoriety due,
among other reasons, to her entrepreneurship in the telephone sex trade. On
numerous occasions, [Cohen and] Kory used Lindsay and Superfon to try to
"broker" deals with Lynch
142. In one such conversation in May 2005, Superfon, according to Lynch,
called Greenberg the kingpin and a criminal and pleaded with Lynch to
cooperate with Cohen for [her] heart, [her] health, and [her] kids and
recommended that Lynch get out of this. Superfon promised that she could
settle this for [Lynch] immediately, and stated that Leonard and Kory [are]
trying to get you out of this situation. When asked why Cohen and Kory were
going after Plaintiffs, Superfon responded: Because he has got the deepest
pockets and insurance. One plus one equals two. Very straightforward.
143. When Lynch requested [that Superfon ask Cohen/Kory to fax through the
proposed] settlement agreement in writing Superfon, according to Lynch,
stated that when she asked Kory to fax Lynch a settlement, Kory said you cant
fax this kind of a deal. It has to be discussed.
144. Through Lindsay, Superfon and other friends, relatives and acquaintances,
Cohen and Kory delivered the message that giving in to Cohens wishes would
be in Lynchs best interest Cohen communicated the same message: Lynch
should settle with Cohen by providing testimony against [various parties].
145. When these tactics to draw Lynch into his extortion scheme proved futile,
Cohen and Kory turned to far more aggressive means to obtain her
cooperation. Indeed, as heard by other witnesses, Cohen and Kory vowed to
"crush her," and planned to use restraining orders and other means to
prevent her from serving as a credible witness regarding both Cohen's
affairs and in regard to the scheme into which they had tried without
success to draw her.
146. Consistent with that vow and plan, and according to witnesses, and on
information and belief, Cohen and Kory's tactics to terrorize, silence, or
disparage Lynch have included, inter alia, the following:

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a. contacting City National Bank, where Lynch, Lynchs son had personal
banking accounts, and convincing City National Bank to put a freeze on all
[their personal and business] accounts [based on fraudulent allegations and
rumors];
b. alleging that Lynch's father and mother were depositing funds for Lynch in
secret offshore bank accounts
c. threatening Lynch that she would go to jail if she did not cooperate, and
having her younger son's father, Steve Lindsay, who was also Cohens record
producer, repeat these threats in the child's presence;
d. threatening to "go to child services, encouraging Steve Lindsay to file legal
action to remove Lynchs younger (and his) son from her custody, and
submitting affidavits (from Kory and Superfon) supporting that effort;

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e. in a coordinated fashion with Lindsays child custody petition, encouraging


or directing Steve Lindsay to call in a warning to the LAPD (not related to
Traditional Holdings, but on some other, unknown pretext) that caused a police
team to descend, guns drawn, on Lynch's home, resulting in her being
handcuffed and taken involuntarily, in her bathing suit, to a hospital psychiatric
ward and medicated without her consent, before being released the next day,
during which time [Steve Lindsey] attempted to persuade Lynchs older son,
Rutger, to [sign over Lynchs home to Cohen/Kory]

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Lynch Reveals Cohens Scheme

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148. [According to Greenberg] Cohens scheme to force Plaintiffs into a


contrived mediation without discovery or publicity might have succeeded, had
not Lynch refused to cooperate. Instead, she made the unilateral decision to
[permit] Plaintiffs' legal counsel [Boies Schiller to review] a variety of
documents and other information that they might not have otherwise seen, all
making clear that Cohen and Kory had clear knowledge that the core
allegations they intended to raise were entirely false and pretextual, as
detailed above. See, e.g., Facsimile Message from K. Lynch to S. Posel (March
17, 2005) (Exh. 11 attached). Fortunately, Lynch turned over not only files
[for review by Boies Schiller], but [detailed] Cohen and Kory's illicit offers
made to her through attorney DiMascio and through other intermediaries,
and shared every detail of Cohen and Kory's attempts to negotiate with or
threaten her in order to obtain false testimony
Cohen and Kory Send a Pretextual and Sham Claim Letter to Plaintiffs
149. [According to Greenberg] As Cohen and Kory continued to heighten their
efforts to bribe or coerce Lynch without knowing that Lynch had already

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exposed their scheme to Plaintiffs, Cohen and Kory also continued to take
additional steps against Plaintiffs in furtherance of their extortion scheme

151. [According to Greenberg] The myriad of demonstrable falsehoods in the


April 10, 2005 demand letter showed that its clear and true purpose was not to
demand compensation for a claimed wrong, but to extort money from Plaintiffs
and their insurers by threatening to damage Plaintiffs reputation. Indeed,
Cohen and Kory knew full well that, from Plaintiffs perspective, once a
celebrity were to raise such allegations of fraud and breach of duty against
them, the damage would already would be done, no matter the ultimate
outcome.

The June 5, 2005 Meeting Scheduled by Cohen and Kory in Colorado

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152. In further pursuit of the scheme to pressure Plaintiffs into paying for
Cohens alleged losses, Cohen and Kory arranged a meeting with Plaintiffs and
their counsel to be held at an airport hotel in Denver, Colorado on June 5, 2005.
See, T. Barnett Aff. (Exh. 9) 32.
154. On or about June 2, 2005, Kory contacted the Courtyard by Marriott,
Denver International Airport hotels sales office and contracted to reserve a
conference room at the hotel for June 5, 2005.
156. Thereafter, on June 3, 2005, Plaintiffs provided Kory, as promised, a draft
complaint

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157. The draft complaint also revealed to Cohen and Kory, for the first time,
that Lynch and others had already exposed the extortion scheme. In particular,
the draft complaint demonstrated that Plaintiffs were aware of Cohens scheme
to use economic compensation, emotional intimidation, and other forms of
undue pressure to coerce Lynch to provide false testimony
158. Thereafter, on June 4, 2005, having learned that the scheme had been
disclosed, and notwithstanding the fact that they knew that Plaintiffs national
counsel had already arrived in Denver for the June 5 meeting, Cohen and Kory
cancelled their reservations with the Denver hotel, cancelled the planned
meeting, and thereafter refused phone calls from Plaintiffs national counsel.
159. Given Cohen and Korys conduct and threats, and their cancellation of the
Denver meeting which they themselves had proposed, Plaintiffs commenced
this lawsuit the next day by filing their Complaint in Boulder County District
Court, from which it was later removed to this Court.
Cohen and Korys Conduct and Communications Directed Towards
Plaintiffs in Colorado
Were Intended to Cause Injury in Colorado
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160. From about November 2004 until June 2005, as part of and in furtherance
of his scheme to extort funds Cohen, through Kory, engaged in a continuing
course of communications
163. [According to Greenberg] Cohen and Korys true purpose and motive
was to gather information that could be cast in a false light and used to extort
funds from
Cohen and Kory Carry Out Their Threats to Disparage and Defame
Plaintiffs
176. Acting with Cohens knowledge, authority and consent, and within the
course and scope of his agency, attorney, joint venture, and co-conspirator
relationships with Cohen, Kory immediately disseminated the press release to
various third parties, including, inter alia various industry and press
representatives, with the knowledge and intent that such third parties would
immediately cause the publication of the press release in industry publications,
and on interactive websites, including blogs, message boards, and the like, that
could be accessed in Colorado, in other states across the United States, and
throughout Canada.
178. Cohen and Kory knew that the false, disparaging, and defamatory press
release was not made in furtherance of any lawful objective or within the scope
of the litigation and that the intended recipients were not involved in or
closely connected with the litigation.
182. Cohen and Korys press release and Cohens additional statements and
publications were false, and known to be false when made, and/or omitted to
disclose or state material facts that were necessary to make the statements,
and their portrayal of [Kelley Lynch and possibly others were] inaccurate and
misleading.
183. Despite their continuing knowledge of falsity, Cohen and Kory have taken
no steps to retract these statements or to cause their removal As a result, the
false, disparaging and defamatory statements have continued to be published
to this day, and remain accessible to persons throughout the state of Colorado,
across the United States, and throughout Canada and the world.
Through Their Publications and Other Tortious Conduct, Cohen and
Kory Have Caused
Plaintiffs to Suffer Economic Injury in Colorado
185. Cohen and Kory also knew that their false, disparaging, and defamatory
press release and other statements and publications would be disseminated to
interactive websites that could be accessed
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Competing Claims For Traditional Holdings Funds


197. Cohen claims that these remaining Traditional Holdings Funds belong
to him.
198. On November 9, 2005, Plaintiffs moved the Court to accept deposit of
these Traditional Holdings Funds, in the amount of $152,165.88, into the
registry of the Court. This motion was granted by this Courts Order dated
November 14, 2005. Pursuant to that Order, the funds were so deposited on
December 14, 2005.
SIXTH CLAIM FOR RELIEF
(Civil Conspiracy)
(Against Cohen and John Doe Nos. 1-25)

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241. Plaintiffs reallege and incorporate herein the allegations contained in


paragraphs 1
through 240 above.
242. [According to Greenberg] Cohen, John Doe Nos. 1-25, and other coconspirators not currently named as Defendants herein (including Robert Kory,
Steve Lindsay and Betsy Superfon), acting with malice and as a combination of
two or more persons, agreed by words or conduct to accomplish unlawful goals
and objectives, or to accomplish lawful goals and objectives though unlawful
means.
243. [According to Greenberg] Cohen and other co-conspirators not currently
named as Defendants herein (including Robert Kory, Steve Lindsay and Betsy
Superfon) committed one or more unlawful acts in furtherance of these
common goals and objectives.
SEVENTH CLAIM FOR RELIEF
(COCCA)
(Against Cohen and John Doe Nos. 1-25)
249. Plaintiffs reallege and incorporate herein the allegations contained in
paragraphs 1 through 248 above.
250. [According to Greenberg] Cohen and the other co-conspirators not
currently named as Defendants herein (including Robert Kory, Steve Lindsay
and Betsy Superfon) are persons within the meaning of C.R.S. 18-17-103(4).
251. [According to Greenberg] Cohen and the other co-conspirators not
currently named as Defendants herein (including Robert Kory, Steve Lindsay

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and Betsy Superfon) are and/or were employed by and/or associated with an
enterprise within the meaning of C.R.S. 18-17-103(2).
252. [According to Greenberg] Cohen and the other co-conspirators not
currently named as Defendants herein (including Robert Kory, Steve Lindsay
and Betsy Superfon) knowingly conducted or participated, directly or indirectly,
in such enterprise through a pattern of racketeering activity, within the
meaning of C.R.S. 18-17-103 (3) and (5), and in violation of C.R.S. 18-17-104
(3).
253. [According to Greenberg] Cohen and the other co-conspirators not
currently named as Defendants herein (including Robert Kory, Steve Lindsay
and Betsy Superfon) conspired or endeavored to conduct or participate,
directly or indirectly, in such enterprise through a pattern of racketeering
activity, in violation of C.R.S. 18-17-104(4).

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254. [According to Greenberg] The acts of racketeering activity which Cohen


and the unnamed co-conspirators, and the enterprise committed, attempted to
commit, conspired to commit, solicited, coerced or intimidated others to
commit included, inter alia:

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(a) Mail fraud, within the meaning of 18 U.S.C. 1341 (See, supra 245(a));
(b) Wire fraud, within the meaning of 18 U.S.C. 1343 (Id.);
(c) Interference with commerce by threats, within the meaning of 18 U.S.C.
1951 (See, supra 245(f));
(d) Criminal extortion, within the meaning of C.R.S. 18-3-207 (See, supra
245(b));
(e) Bribing a witness [Kelley Lynch], within the meaning of C.R.S. 18-8-703
(See, supra 245(c));
(f) Intimidating a witness; within the meaning of C.R.S. 18-8-704 (See, supra
242(d));
(g) Tampering with a witness [Kelley Lynch], within the meaning of C.R.S. 188-707 (See, supra 245(a)).
255. The predicate acts described herein formed a pattern of racketeering
activity, were related to the conduct of the enterprise, and were related to each
other as part of the common plan described in paragraph 244 above.

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