Mikhlyn et al v. Bove et al

Filing 225

First MOTION for Sanctions by Anna Bove Collections, Inc., Anna Bove Company, LLC, Anna Bove Embroidery Supplies, Inc., Ana Bove, Polina Dolginov. (Attachments: # 1 Exhibit Exh. 1, # 2 Exhibit Exh. 2, # 3 Exhibit Exh. 3, # 4 Exhibit Exh. 4) (Berger, Jonathan)

From Ana Bove, Alex Sakirski, Polina Dolginov
VIA ECF
Honorable Ramon E. Reyes, Jr.
United States Magistrate Judge
United States District Court
225 Cadman Plaza East
Brooklyn, NY11201
July 12,2011
Re: Vadim Mikhlyn, Inga Mikhlyn and ABC All Consulting, Inc. v. Ana
Sove, Polina Dolginov, et al; Docket No.: 08 CN. 3367
Dear Judge Reyes:
Defendants file this letter motion due to the recently uncovered
manipulations of Plaintiffs with QuickBook, and possibly with other
important financial documents, which we believe to warrant the most
severe sanctions against Plaintiffs. Plaintiffs' admission that they
changed the data corroborates our position that Plaintiffs stole
money from Defendants
We've had a meet and confer with the opposing counsel regarding the
financial records of Plaintiffs, especially QuickBooks and related
financial data.
In Plaintiffs' recent letter, dated June 20, 2011 (see Exhibit #1)
they admit that every time they change QuickBooks, they write over
the prior version. Per our understand, writing over the prior version
means that they are erasing information which previously existed, and
are thus destroying relevant financial data.
Their claim that they have provided thousands of financial documents
so that we can track the various changes is unacceptable. First,
Plaintiffs were not allowed to change and write over financial data,
while hiding the changes. Per our understanding, that amounts to
destruction of financial data, which is prohibited.
In addition to Plaintiffs' own words, we also have serious evidence
that Plaintiffs really did rewrite this data.
Defendants discovered modifications of QuickBook in section of
“Profit & Loss”, between the data provided to us in March 2009, and
the new QuickBook, provided by Plaintiffs in May 2011. Inside the new
QuickBook, old data was altered and/or deleted, and also new data
added. Overall, over 90 lines changed.

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Also, changes were made to comments in certain records, which reflect
PayPal payments made by Ana and Polina to Plaintiffs since 2004
through 2008, to pay for services which Mikhlyns provided for the
embroidery business on ongoing basis. This way Plaintiffs have
changed data for the purpose of forging a key evidence for the
parties' “partnership” duspute. This evidence originally showed that
Plaintiffs used to receive payments from Defendants for the services
they provided, which proves that Plaintiffs worked for Defendants.
Since Plaintiffs declared that they never received regular payments
for their work from Defendants, they decided to destroy the evidence
which showed exactly the opposite. These comments corresponded to
PayPal comments, made by Defendants when sending these payments.
These comments indicated for whom each certain payment was intended,
showing initials of the recipient. For example, “IM” meant that a
payment was made for Inga Mikhlyn, “OP” - for Olga Plyuschay (Inga's
daughter), “VM” - for Vadim Mikhlyn. Plaintiffs obviously forgot
that they provided us the earlier spreadsheet in 2009, and decided to
just delete all of these comments from the “original format”
QuickBook. Therefore, they willfully destroyed critical evidence.
There are over 60 such changes, made willfully, record by record, as
Plaintiffs personally explained us earlier, regarding QuickBook
redactions of social security numbers, which Your Honor allowed. The
is a total of 60 lines which have been modified in this manner.
Except of that, Defendants believe that Plaintiffs needed those
changes to prove their false claims in IRS, saying that the weekly
payments for nearly 4 years (2005-2008), which Plaintiffs have been
receiving from Defendants, weren't payment for their work in
Defendants' business, but were something else. In 2009 Ana Bove sent
1099 and 1096 forms to IRS, regarding these payments to Plaintiffs.
Defendants also demanded from Plaintiffs their correspondence with
IRS, which Plaintiffs must have provided during Discovery but failed
to do so. When we requested this correspondence, Plaintiffs stated
that it's late and that discovery is over. Despite our recent request
to extend the discovery, which was also for providing these
documents, which Your Honor granted, Plaintiffs refuse to provide
this correspondence with IRS. Therefore we respectfully request Your
Honor to order Plaintiffs to provide us all of their correspondence
with IRS and related documents, regarding the following matters: the
issue of Plaintiffs receiving receiving those payments, and also
other correspondence of all Plaintiffs with IRS.
It is important to note that both Vadim and Inga are very technically
advanced individuals. Vadim is a computer expert and a programmer,
and Inga at the very least knows programming basics, and is an

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exceptionally advanced PC user. There is no slightest chance that
they could destroy this QuickBook data due to a lack of knowledge, or
by accident.
There is also no excuse for not backing up the original QuickBook
files, when this dispute began. If, like Plaintiffs say, only one
copy of this QuickBook ever existed, this must have happened due to a
plan to have only one copy, and then to overwrite it, while
destroying evidence. Namely Inga was writing this QuickBook, and Inga
is an experienced person, who received high financial education, and
she must understand the importance of backing up the one key
financial document of ABC All Consulting, Inc. All the other “source”
documents altogether do NOT bear as much information as the
QuickBook, because QuickBook carries Inga's own perception of the
income-expense categories and of reporting for the embroidery
business. This perception isn't available from any alternative
papers, while it greatly influences how Plaintiffs reported to IRS,
and greatly influences the outcome of Defendants' financial claims.
QuickBook must also be the exact file from which Inga “was dictating”
to her accountant, who declared under oath that she has never seen
even a single original document of ABC All Consulting, Inc. It's
physically impossible to dictate such information from the thousands
of various disorganized invoices, receipts, statements and checks.
In addition to this, it's now clear that Plaintiffs concealed from
Defendants other financial and non-financial evidence, which
Defendants have requested. When obtaining Plaintiffs' QuickBook in
May 2011, Defendants discovered that Plaintiffs didn't provide a
whole large and extremely important report which shows the Balance
Sheet with loans and assets of the company. Even if Plaintiffs didn't
wish to provide QuickBook back then, they must have given this
report, at the very least.
Defendants also discovered substantial differences between the new
QuickBook and Plaintiffs' yearly tax reports. Such significant
changes between the main financial document and taxt reports are
found in every tax year since 2004 through 2008. The total amount of
such changes is over $870,000. This way the data of new QuickBook
completely contradicts to Plaintiffs' tax reports, which were
provided by Plaintiffs' accountant back in 2009. This once again
shows that Plaintiffs have modified their QuickBook not only within
the “Profit & Loss” part, but also in “Balance Sheet” etc.
These divergences suggests that Plaintiffs have filed substantial
amendments to IRS after this litigation began (probably after 2009).
When we requested Plaintiffs to provide any and all such tax-related
amendments, and correspondence with IRS related to this case, they
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refused to produce them. Plaintiffs also refused to provide us
QuickBook-related metadata, that would allow us to track the changes
they made to QuickBook file.
When Plaintiffs and us requested the last discovery extension from
Your Honor (6/20/2011, Exhibit #3), we specified that one of the
reasons was to allow Plaintiffs provide us these documents, since
earlier Plaintiffs said that they won't do this because discovery is
over, and got re-opened only for very limited matters. Now Plaintiffs
again refuse to do this, and for delaying and failing the discovery
they've just sent a new lawsuit to Supreme Court (see Exhibit #4),
very similar to this lawsuit, since it's based on disputes over this
same Intellectual Property. We're more than sure that these documents
include proofs that Plaintiffs have changed these annual tax reports
during the course of disco6/15/2011 very.
Therefore, we respectfully request Your Honor to order Plaintiffs
produce these documents before the end of discovery, because we must
ask questions regarding these documents, on deposition of Inga
Mikhlyn. Defendants must have the up-to-date files for properly
questioning Plaintiffs. These must be just several papers, which are
not troublesome to produce, and this production won't prejudice
Plaintiffs in any way. On the other hand, the lack of these documents
would greatly prejudice Defendants.
There is also serious evidence that Plaintiffs withheld their chats,
which happened after this litigation began. As Vadim Mikhlyn
testified during his deposition, he and Inga now work on different
floors, and they do use chat to talk to each other. These were never
produced.
Considering that they have been so vigilant in claiming that we have
failed to produce discovery, their simultaneous regular destruction
of financial data to hide changes made is absolutely outrageous. It
warrants the most severe sanctions, considering how the financial
data is essential to this lawsuit. Therefore, we would like to
request Your Honor's permission to file an appropriate sanctions
motion against Plaintiffs.
There is also an important organizational issue. We understand that
Mr. Berger will be on trial before Judge Melancon during the week of
July 25th, and he can't be available to attend any court conferences.
We also understand that Mr. Berger will be on vacation starting
August 8th.
If Your Honor will schedule a conference in your chambers, we'd like
Polina to be able to attend by telephone with her calling in from
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Israel. Her knowledge of financial data, and a better
express herself in English, are important.

ability

to

We also declare, being duly sworn, that the factual allegations
contained herein are true, to the best of our knowledge.

Thank you for your consideration!
Respectfully submittedr
Ana Bover Polina Dolginovr

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Dated

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Alex

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