Saturday, October 23, 2010

Barney Finally Called On His High Jinx



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 On October 6, 2010 we discussed Barney's Supplemental Statement filing.  This filing asked the bankruptcy court to allow Barney's group to hire a few firms, amongst them the Kelly Law Group.  KLG was to provide legal services to the Siena.  As we all know, the Kelly Law Group is run by (virtual) legal dynamos Stephanie & Matthew Kelly, also known as Barney's daughter and son-in-law. 

While the SEC allowed its employees to spend many of their office hours watching pornography on the internet instead of prosecuting the NG family and Bruce Horwitz, the lawyers in the Office of The U.S. Trustee were working hard, as evidenced by their October 20, 2010 filing objecting to the arrangement between Barney NG and the Kellys.  The Attorneys for the Acting U.S. Trustee August B. Landis deserve a standing ovation thus far.

In 13 easy-to-comprehend pages, Landis' attorneys spell out exactly why the sweetheart deal Barney put in place with his family doesn't pass muster and would have been denied by Judge Newsome had the Siena not shut down earlier this week.  It is comforting to finally see Barney take a right hook to the chin.  Perhaps he didn't realize he'd get called on his bullshit.  This isn't the bush leagues anymore, Barney.  You can no longer make up the rules as you go along, enriching yourself and those you deem worthy.  You are now playing in the big leagues.  Everything you do shows up on PACER.  Sure, the RGJ and other newspapers may not cover ever move you make, but you can be certain the team behind will.  A simple Google search leads people to this website.  The web traffic shows people are coming to this website often, looking for updates on your latest transgressions.  You and your Bar-K cohorts fooled us for years.  Those days are over.

Getting back to the Landis filing, here are the salient points:


1.  Matthew Kelly is Barney Ng's son-in-law and grand-son-in-law to Walter Ng.
2.  Barney Ng is the managing member of each of the debtors and has served in that capacity since May 8, 1998.
3.  Barney Ng is the 100% owner of Wild Game Ng, LLC.
4.  Barney Ng is the sole unsecured creditor for Hi-Five Enterprises, LLC ($75,000).
5.  Barney Ng and Walter Ng are co-debtors with One South Lake Street, LLC on the secured note to RE Reno, LLC.
6.  Walter Ng is the registered agent and manager of One South Lake Street, LLC.
7.  The Kelly Law Group - Matt Kelly was paid $4,656.70 on the petition date.
8.  Matthew Kelly is not licensed to practice law in Nevada, only California.
9.  The Kelly Law Group, LLP is "a virtual law firm."
10.  Although the Application states that the Applicant was employed since December 2009, the Engagement Letter is dated July 22, 2010.
11.  Barney Ng's testimony at the 341 hearing state in-part:
      a.  Matthew Kelly was employed on an "oral basis before the bankruptcies were filed "because he's my son-in-law";
      b.  the flat fee rate of $7,000 per month is a "family discount";
      c.  Matthew Kelly was employed by Barney Ng on numerous personal matters;
      d.  Matthew Kelly was in-house counsel for Bar-K, Inc., an entity owned by Barney Ng and where Barney Ng was also employed;
      e.  Matthew Kelly left Bar-K, Inc. employment when Barney Ng left Bar-K, Inc. employment;
      f.  Walter Ng and Barney Ng's brother were also involved with Bar-K, Inc.;
     g.  initially, Matthew Kelly was working on mostly personal issues for Barney Ng (70% of his time), not the Debtors; and
      h.  Barney Ng has an unsecured claim of approximately $35 to $36 million, that he intends to subordinate to other unsecured claims.
12.  The first application to employ the Applicant was filed on September 8, 2010, forty-nine (49) days after the petitions were filed.

Whew.  That's a lot to digest, but we're not done yet!

In the "Application Of Authorities To The Relevant Facts" section of the filing, Landis' team describes  why the Kelly Law Group is not eligible to receive Barney's rich handout.

 A professional in a bankruptcy case should not be put in the position of having to divide his loyalties.  Matthew Kelly, as Barney Ng's son-in-law, is an insider and therefore is NOT a disinterested person. 

The Application and the accompanying verified statement of Applicant and Barney Ng, do not adequately disclose the significant connections between the Applicant, Barney Ng and Walter Ng. 

Additionally, Applicant gave a less than full disclosure that his "four years working in-house for one of California's largest private commercial real estate lenders" was Bar-K, Inc., a company that is owned by Barney Ng and also involved Barney Ng, Walter Ng and Barney Ng's brother.  Applicant's statement that he "is a disinterested person as that term is defined in 11 U.S.C. § 101(14)," shows a lack of understanding of and appreciation for the requirements of disclosure by professionals working for a bankruptcy estate.

Applicant's legal abilities are not unique or extraordinary enough to warrant overlooking the obvious concerns regarding his allegiance to his family over the interests of the estates.

Allow us to summarize:

1.  The U.S. Trustee and his staff won't stand for Barney's bovine feces.
2.  Matthew Kelly attested to the fact that he and his firm would be a "disinterested" party as required by law.  Landis called him on his blatant lie.  The California State Bar will want to look into this ethical breach.
3.  Barney's $7,000 per month gravy train broke down and became unhitched.
4.  How much would this contract cost if the 'family discount' weren't applied?
4.  We still haven't recovered a single cent of our investment, unlike favored investors Leonard Epstein and Phillip Tagami.

Please add your own analysis below in the comments section.


  1. Let's not forget that Barney's son-in-law, Matthew, was "in-house counsel for Bar-K, Inc", meaning Barney, during the final years that we were led down the primrose path, including while he (Barney) made loans outside of California before the rules were changed to allow him to do so, and that he (Matthew) defended his father-in-law so staunchly against the rest of the family that he quit Bar-K when Barney left the Lafayette office and supposedly resigned as PRESIDENT.

    He's Barney's personal child's play, paperwork lawyer and, as evidenced by the legal disaster that is Bar-K, RE Loans, RE Reno, Mortgage Fund '08, etc., he's hardly qualified to do much of anything in that particular field.

    But don't worry about the Barney's kids. I'm sure that he'll continue to give Matthew and Stephanie their 'allowance', but now he'll simply have a bit harder time making us pay for it and hiding it while he does.

    Hey, as a 2nd degree black belt Matthew might have a future as a replacement for the burned out former football player who is Barney's bodyguard.

    Then he and Stephanie could conduct their 'virtual' law practice out of Barney's guest house and save some money on rent. Theire sole client would be right next door!

    For those who think this too harsh on the 'kids' . . . TOUGH! Matthew Kelly helped his father-in-law ruin hundreds and hundreds of families, including the financial futures of MANY other 'innocent' 'kids'.

    You should have absolutely no sympathy for them and they should suffer the same fate as the rest of us.

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  3. "Have I missed the boat here?"

    Newsletter, Dec., 2009
    "Organization of RE Loans LLC, B-4 Partners and Bar-K Inc.
    RE Loans LLC is managed by B-4 Partners LLC. B-4 Partners is owned by Walter,Kelly and Barney Ng and is managed by Kelly and Walter Ng, who consequently manage
    RE loans LLC.
    Bar-K Inc. is the Servicer for RE Loans LLC. Bar-K Inc is owned by Barney (50%) and Kelly Ng (50%) and is responsible for origination, servicing and resolution of loans. As of September 4, 2009, Barney resigned as President of Bar-K Inc. Kelly and Walter Ng are the officers of Bar-K at present. Matthew Kelly, formerly employed by Bar-K as the in-house attorney, is no longer with the company."

  4. Oh, I should probably also mention that Barney resigned as PRESIDENT of Bar-K only after his failed attempt to fire Kelly and wrest total control of everything from his father.

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  6. "Please correct this if I am wrong. You seem to imply that Barney Ng quit Bar-K and Matthew Kelly quit Bar-K in solidarity."

    We simply quoted the words of the attorneys from the U.S. Trustee's office as we aren't privy to the true reality of the situation. Luckily, we have readers who appear to be well-versed on Bar-K's internal machinations.

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  8. It is, nonetheless, a fact that it's written. Also fact are the written communications wherein Barney, through one of his lawyers, attempted and failed to fire Kelly in 2009.

    While it's also fact the Barney and RE Loans lost their RE licenses, that occurred many months after the announced resignation of Barney as PRESIDENT of Bar-K and it's pure conjecture that the loss of the RE licenses was the reason for the resignation.

    It would also have to be an extraordinary coincidence that the opportunity to make such a connection would present itself over eight months after the fact.

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  10. Researcher,

    You've written "the accusation" several times. Which "accusation" would that be?

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  13. We've seen what's available on the DRE website, including the H-10752 SF note, and I actually quoted the results in the 3rd comment to this discussion and posted the links to the web page which you reference.

    What we haven't seen is the "legal document", the "Accusation" (complaint) you refer to.

    Kindly provide a link to a copy of the document. If you can't, perhaps you can shed some light on who filed the complain, what the complaint was, and about which property(ies) or loan(s).

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  15. We're all aware that Barney collected his inordinately large pieces of the profit pie at least twice for every loan that he found and that was made. (He also got paid for making the appraisals.)

    We're also aware that there are/were several Ng owned entities that got paid, either in the beginning, the middle or on the back end before we investors ever saw a dime. That's how the Partners all made such huge sums of money. (Estimated to be well over $200 million during the three years prior to the July, 2007.

    We're also aware that, in many cases, Barney added his fees to the loan amount and either got paid from the first dispersal of funds or took paper against the property.

    The business license for Walter Ng's Gold Mountain Financial Institution, Inc., C2158874, was suspended, supposedly for tax fraud, around 3/15/99(?).

    Is this the entity to which you refer?

    If so, are there any supporting documents available to us?

    What prompted the Dept. of RE to initiate the investigation in the first place?

  16. I 3/15/99 date shown above is not the correct date of the license suspension. It's a filing date.

    The license was still listed as 'Active' in August of this year.

    I don't know the actual date of the suspension.

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  18. Since it's no longer licensed, it appears that Gold Mountain is out of business.

    Did the investors there loose as bad as we did in RE Loans, RE Reno and MF '08?

    If so, approx. how many investors were there at the end and how much was the total loss?

    Was any part of Gold Mtn. encumbered to WF or any other such entity?

    Are those who were left with nothing, if any, being treated any better than we are by the Ngs?

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  20. Since Gold Mountain is prominently mentioned in some of the documents pertaining to the Siena (all associated entities) bankruptcy, I wonder now if any of those investors you mention (above) have/had money in the Siena through Gold Mountain or some vehicle other than RE Reno and/or RE Loans?

    If so, that might explain some of the questionably high numbers we're see there.

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  22. "there were also 149 individual investors".

    Representing the $29 million invested directly to RE Reno or in addition to the combined $60 million from REL and RE Reno?

    On October 21, 2010 at 11:00 a.m., a hearing was held before the Honorable Gregg W. Zive, United States Bankruptcy Judge, to consider the Application for Order Approving the Employment of Kelly Law Group LLP and Matthew Kelly as Special Corporate Counsel to the Debtors Pursuant to 11 U.S.C. § 327(e) Nunc Pro Tunc to July 21, 2010 (the “Application”) filed by the above-captioned debtors and debtors-in possession
    (the “Debtor”). The Debtors appeared through their counsel of record, Aram Ordubegian and Mette H. Kurth of Arent Fox LLP. All other appearances were made at the hearing as set forth on the record of the Court. For the reasons set forth on the record, IT IS HEREBY ORDERED THAT the Application is DENIED without prejudice.

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  25. Question/Comment re. Barney "while his investment in R.E. Loans was trivial."

    Barney and immediate family appear to have/had/control a number of accounts in RE Loans;
    NG_010, NG_013, NG_014 (Wild Game Ng), NG_070, 4NG_071, and his daughter and son-in-law 4KEL035, 4KEL036, 4KEK037.

    It would be interesting to know what transactions occurred with these accounts from June, 2007 until today.

  26. Typo - "4KEK037" shown above should be 4KEL037.

  27. What has happened to "Researcher"? Wondering if he/she left because of threats or promises? Wishing I saved some of the data Researcher shared . . .