B2 Opportunity Fund, LLC v. Trabelsi et al

Filing 154

Judge Richard G. Stearns: ORDER entered granting 127 Motion to Withdraw as Attorney. Attorney Gershon M. Gulko terminated; granting in part and denying in part 145 Motion for Permission to File Electronically. Counsel's motion to withdra w (Dkt #127) is GRANTED, but he is ordered to SHOW CAUSE why he should not be subject to sanctions under Rule 11 or this court's inherent power by July 13, 2017. Nissim Trabelsi's motion for leave to file electronically (Dkt #145) is GRANTED IN PART AND DENIED IN PART. Nissim may represent himself individually only. The artificial entities (Mazzal Trust, The Bany's Living Trust, Mazzal Holding Corp., and Magnolia Road, LLC) must be represented by new counsel no later than July 31, 2017. Aliza Trabelsi must either retain counsel or inform the court of her intention to proceed pro se in her individual capacity no later than July 31, 2017. (RGS, law1)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 17-10043-RGS
B2 OPPORTUNITY FUND, LLC
v.
NISSIM TRABELSI ET AL.
MEMORANDUM AND ORDER ON
MOTION TO WITHDRAW AND
MOTION FOR LEAVE TO FILE ELECTRONICALLY
June 29, 2017
STEARNS, D.J.
This order assumes familiarity with the procedural background
outlined in the companion order issued today, see Dkt #153, and the factual
background described in the court’s preliminary injunction order, see B2
Opportunity Fund, LLC v. Trabelsi, 2017 WL 1196645 (D. Mass. Mar. 30,
2017).
Counsel for the Trabelsi Defendants has moved to withdraw from the
case, citing a breakdown in communication with his clients. In a normal
situation, the court would grant such a motion without hesitation. The court
has delayed, however, because of concerns about counsel’s filings in this
case.

In its Complaint, B2 alleged that “Shawn Telsi” was merely an alias for
Nissim Trabelsi, and that the Telsi alias was a critical feature of a stock fraud
scheme. In opposing B2’s motion for a temporary restraining order, counsel
submitted an affidavit from Nissim in which he stated that he changed his
name to Shawn Telsi in 1989 when he became a U.S. citizen. Dkt #10-1, ¶ 2.
He also averred that he had “received and exchanged text messages with
Peterson talking about the difficulties releasing the ten million shares held
by me under my assumed name, that is, Shawn Telsi.” Id. ¶ 10. The court
issued a TRO based in part on this understanding. See Dkt #29. Thereafter,
counsel filed the Trabelsi Defendants’ answer to the original Complaint,
which acknowledged that Nissim “is a/k/a Shawn Telsi.” Dkt #66, ¶ 8. Once
again, the court relied on this representation, noting in its order granting B2
a preliminary injunction that “[Nissim] Trabelsi admitted, first in his
briefing on the TRO and subsequently in his answer to the Complaint, that
he sometimes uses the name Shawn Telsi in transactions.” B2 Opportunity
Fund, 2017 WL 1196645, at *2.
After B2 filed its Amended Complaint, however, Nissim apparently
attempted to backtrack. In the answer to the Amended Complaint, Nissim
now “admits that he is a/k/a Shawn Telsi, however, Defendant states further
that he is the authorized representative of said Shawn Telsi who is from
2

Israel.” Dkt #112, ¶ 8. Further, among the facts alleged in his prospective
counterclaims is the assertion that “Nissim had a chain of text messages with
[B2 CEO Peter] Peterson, clearly discussing the difficulties releasing the 10
million shares held by Shawn Telsi, who is an Israeli citizen and was one of
the original investors. In fact, Nissim was authorized by Shawn to act on his
behalf in the United States for the investments.” Id. ¶ 10. This assertion cites
to Exhibit E of the answer, which is a completely unrelated form that does
nothing to demonstrate that Shawn Telsi is a real person. Dkt #112-5. No
other exhibit attached to the answer appears relevant to this assertion.
Finally, in opposition to the motions to strike, counsel filed another affidavit
from Nissim stating (insofar as relevant to this issue) that he has “read the
contents of all of the pleadings and exhibits submitted on my behalf by my
attorney” and that all the statements in those pleadings “are true to the best
of my knowledge.” Dkt #149-1; #150-1.
Federal Rule of Civil Procedure 11(b)(3) states that each time an
attorney files a document with this court, he warrants that “the factual
contentions have evidentiary support.” The representations made to this
court about the relationship between Telsi and Nissim are plainly
contradictory. In particular, the assertion that Nissim personally held the
shares “under [his] assumed name, that is, Shawn Telsi,” is incompatible
3

with the assertion that he was acting as the representative of a separate
individual by that name. This apparent dissimulation on a key point is
particularly troubling in light of other features of the answers. In both
answers, virtually every paragraph professes either a lack of knowledge
sufficient to respond to B2’s allegations or states that allegations which
mention documents B2 attached to its Complaint speak for themselves “and,
thus, such allegations are denied.” This includes many paragraphs making
allegations about Nissim’s personal conduct which he presumably should be
able to admit or deny. See, e.g., Dkt #112, ¶ 37 (response to allegation
describing what shares Nissim held at the time of a stock exchange
agreement); ¶¶ 86-88, 125 (response to allegations about Nissim’s transfer
or failure to transfer shares as contemplated in the agreement); ¶ 162
(response to allegation that Nissim sold shares between February of 2016
and January of 2017); ¶ 176 (response to allegation that Nissim sold
additional shares after B2 requested a TRO). These statements, too, raise
the possibility of violations of Rule 11(b)(4), which requires that an attorney
verify that “denials of factual contentions . . . are reasonably based on belief
or lack of information.”
In light of these filings, counsel for the Trabelsi Defendants is ordered
to show cause no later than July 13, 2017, why sanctions should not issue
4

against him under Rule 11 or the court’s inherent powers. See Fed. R. Civ. P.
11(c)(3); Chambers v. NASCO, Inc., 501 U.S. 32, 46-47 (1991). Counsel’s
motion to withdraw will be granted, but that does not relieve him of the duty
to respond to the show cause order. See Charles Alan Wright et al., Federal
Practice & Procedure § 1337.1 (“Given the fact that violative conduct is
sanctionable at the time the offending papers are filed or improper
representations regarding them are made, the attorney remains subject to
sanctions regardless of his continuing involvement in or withdrawal from the
litigation, thereafter.”).
After counsel filed his motion to withdraw, Nissim moved for
permission to file electronically, apparently intending to proceed pro se for
the time being. Although the court believes this is ill-advised, Nissim is
permitted to do so in his personal capacity. See D. Mass. Local R. 83.5.5(a).
However, in light of the contradictory statements from Nissim already
present on the record, he is reminded that pro se litigants are bound by the
Federal Rules of Civil Procedure (including Rule 11) and the Local Rules. See
id. 83.5.5(d); FDIC v. Anchor Props., 13 F.3d 27, 31 (1st Cir. 1994). He also
remains obligated to comply with the preliminary injunction entered against
him by this court. See Dkt #72.

5

Nissim’s motion will be denied, however, to the extent he seeks to
represent other entities in this suit. Nissim’s motion is purportedly on behalf
of three other categories of defendants previously combined under the
Trabelsi Defendant banner and originally represented by the same counsel:
1) himself in his capacity as trustee of the Mazzal Trust and The Bany’s Living
Trust; 2) his wife, Aliza Trabelsi, both individually and in her capacity as
trustee of The Bany’s Living Trust; and 3) two corporate entities, Mazzal
Holding Corp. and Magnolia Road, LLC.
The Local Rules are clear that pro se litigants “may not represent any
other party.” D. Mass. Local R. 83.5.5(b). In addition, “[a] corporation,
partnership, limited liability company, trust, estate, or other entity that is
not an individual may not appear pro se,” except in limited circumstances
not applicable to this case. Id. 83.5.5(c). Nissim therefore cannot represent
any of the other entities listed on his motion, but may represent only
himself in his personal capacity. The other entities — Mazzal Trust, The
Bany’s Living Trust, Mazzal Holding Corp., and Magnolia Road, LLC — will
have thirty days to retain counsel to represent their interests in this
proceeding. Aliza Trabelsi should, within thirty days, either retain counsel
or express her intention to proceed pro se in her individual capacity only
(not as trustee of The Bany’s Living Trust).
6

ORDER
For the foregoing reasons, counsel’s motion to withdraw (Dkt #127) is
GRANTED, but he is ordered to SHOW CAUSE why he should not be subject
to sanctions under Rule 11 or this court’s inherent power by July 13, 2017.
Nissim’s motion for leave to file electronically (Dkt #145) is GRANTED IN
PART AND DENIED IN PART. Nissim may represent himself individually
only. The artificial entities — Mazzal Trust, The Bany’s Living Trust, Mazzal
Holding Corp., and Magnolia Road, LLC — must be represented by new
counsel no later than July 31, 2017. Aliza Trabelsi must either retain counsel
or inform the court of her intention to proceed pro se in her individual
capacity no later than July 31, 2017.
SO ORDERED.
/s/ Richard G. Stearns
__________________________
UNITED STATES DISTRICT JUDGE

7