Timothy Culberson, pro se shareholder in the Sorrento Therapeutics cases tonight filed an emergency motion to dismiss the cases or transfer venue “because fraud and factual misrepresentations were recently uncovered and confirmed through documented evidence within the last few days” pertaining to the continuing fallout from former judge David R. Jones’ undisclosed
relationship with former Jackson Walker attorney Liz Freeman.
The motion contends that “new evidence was just uncovered that proves Latham & Watkins, LLP and Jackson Walker, LLP conspired to fraudulently file this Sorrento Chapter 11 case in the Southern District of Texas representing venue facts that were knowingly false
The motion adds: “Any further action by the Court in light of this illegitimate and improper venue selection process combined with the Elizabeth Freeman/ Judge Jones connection in this case requires immediate dismissal or transfer of venue
.” (emphasis added). The motion also calls upon the US Trustee to investigate whether the facts rise to the level of violating laws on bankruptcy fraud.
Judge Christopher Lopez previously granted
Culberson limited discovery with respect to Jackson Walker after the judge denied a prior motion
by Culberson that sought to disqualify Sorrento professionals Latham & Watkins and M3 Partners and to disgorge fees due to their alleged failure to request recusal of former judge Jones.
Tonight’s motion alleges that 10 hours before the bankruptcy filing, Latham and Jackson & Walker conspired to fraudulently set up a PO Box in Texas for the purpose of filing in the venue and attested that the location was the company’s “principal place of business.” The motion includes an exhibit of the documents establishing the PO Box at issue, among others. Culberson points out that the rule on venue “clearly and unambiguously states that venue is proper only in a district where the ‘…principal place of business…[is] located for the one hundred and eighty days immediately preceding such commencement….’ Or if the corporation’s principal place of business was located in two districts during that 180-day period then venue is proper only in the district where the principal place of business was located the longest.”
The motion says that the bankruptcy court does not have discretion to retain the case if the venue rule - 28 U.S.C. section 1408 - is violated, but may either dismiss the case or transfer to a proper venue. The minority view interpreting the rule provides judges with discretion to transfer the cases, Culberson says, arguing that in the interest of justice, the court should transfer venues. The motion asserts that “Sorrento has zero ties to Texas, $70,000,000 in professional fees billed to liquidate a company while the presiding judge was sleeping with one of the lawyers consulting on the case, and a CRO appointed with zero experience in restructuring biotech companies.”
If nothing else, the movant argues, the “appearance of impropriety should be removed by allowing another Court in a proper venue to put new and fresh eyes on this very unusual case.” Further, Culberson says given the alleged “proven fraudulent actions” of debtors’ counsel, any expenses related to the proper transfer of venue should be borne by them.
The motion also asks the court to compel discovery as to Latham - a request that was previously denied - “now that it is proven they conspired to file this case in the Southern District of Texas based on fraudulent venue facts.”
Editors' Note: This story has been updated to replace the motion with a modified version uploaded to PACER to address sealing/redaction concerns.