peter paul's answer to stan lee's 2nd amend complaint
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PETER F. PAULIN PRO PERSONA1854A HENDERSONVILLE RD #10ASHEVILLE, NC 28803(828) 776 4434peterfpaul@charter.net
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
QED PRODUCTIONS, LLC, aDelaware limited liability company;
POW! ENTERTAINMENT, INC., aDelaware corporation; STAN LEE, anindividual, suing individually and in aderivative capacity on behalf ofshareholders of Stan Lee Media, Inc.,STAN LEE MEDIA, INC., a ColoradoCorporation; and STAN LEE MEDIA,INC., a Delaware corporation
Plaintiffs,
v.
JAMES NESFIELD, an individual;A.F. GALLOWAY, an individual;DOUGLAS C. COGAN, an individual;and DOES 1 through 10, inclusive,
Defendants.
CASE NO. CV 07-00225 SVW (SSx)
[Hon. Stephen v. Wilson]
DEFENDANT PETER PAUL'SANSWER TO SECOND AMENDEDCOMPLAINT; DEMAND FORJURY TRIAL
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ANSWER TO SECOND AMENDED COMPLAINT
Defendant Peter Paul ( Defendant) answers the averments in the Second
Amended Complaint herein (the SAC) as follows:
1. Answering the averments in Paragraph one, Defendant denies that this Courthas federal questions jurisdiction over the claims alleged under federal law
because Plaintiffs do not have requisite standing in that they do not legally
own the intellectual property rights that give rise to the federal questions
raised.
2. Answering the averments in Paragraph two, Defendant admits that this
Court has personal jurisdiction over the Defendant. Except as expressly
admitted herein, Defendant denies the remaining averments in the
Paragraph.
3. Answering the averments in Paragraph three, Defendant admits that venue
may remain in this Court. Except as expressly admitted herein, Defendant
denies the averments in the Paragraph, including but not limited to the
averment that Plaintiffs claims arose within this district.
4. Defendant denies the averments in Paragraphs four, five, six and seven.
5. Defendant denies the averment in Paragraph eight.
6. Defendant admits the averments in Paragraph nine and ten.
7. Answering the averments in Paragraph eleven, Defendant admits that
Defendant James Nesfield is a resident of the State of North Carolina, and
has been so at all times material hereto. Except as expressly admitted
herein, Defendant denies the averments in the Paragraph.8. Answering the averments in Paragraph twelve, Defendant admits that
Defendant A. F. Galloway is a resident of the State of North Carolina, and
has been so at all times material hereto. Except as expressly admitted
herein, Defendant denies the averments in the Paragraph.
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co-creations are well-known projects such as Fantastic Four, Incredible
Hulk, Spiderman and X-Men, which have been developed and marketed, at
times, by Marvel Entertainment, Inc. and by Stan Lee individually, and
some of Marvel Entertainment, Inc.s predecessors in interest and affiliatedcompanies; and (e) Stan Lee performed work in association with certain
predecessors in interest of Marvel Entertainment, Inc. and continues to be
one of the highest paid employees, and a fiduciary, of Marvel Entertainment,
Inc. Except as expressly admitted herein, Defendants deny the averments in
the Paragraph.
16. Answering the averments in Paragraph twenty-four, Defendant admits the
chronology of events surrounding the founding and taking public of SLMI
but emphatically denies all averments that Stan Lee Media, Inc. has no
interest in any creation of Stan Lee, and Stan Lee's creations were always
deemed to be works for hire by Stan Lee and that Stan Lee Media has no
claims to all of Stan Lee's creations .
17. Defendant denies the characterizations of him and his role in Stan Lee
Media and averments in the last sentence of Paragraph twenty-five.
Defendant admits that he was co-founder of SLMI and served as a
consultant to the company and advisor to the Chairman Stan Lee along with
personal legal counsel to Stan Lee, in-house legal counsel from Skadden
Arps, outside legal counsel from pre-eminent corporate and entertainment
law firms including Ziffren, Brittenham and Branca, Skadden Arps, Arthur
Lieberman and Jeff Segal and , and global accounting firms.18. Defendant denies the averment in Paragraph twenty-six because when Stan
Lee founded SLMI in October, 1998, he had no contractual limitations
whatsoever on his actions, employment or his ownership of any and all
property rights he ever created.
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19. Answering the averments in paragraph twenty-seven, Defendant admits that
Ex. A to the SAC speaks for itself. Except as specifically admitted herein,
Defendant denies the remaining averments in the Paragraph.
20. Answering the averments in paragraph twenty-eight, Defendant admits thatStan Lee signed the November 17, 1998 Marvel Agreement a month after he
signed the October 15, 1998 SLE Agreement. Except as specifically
admitted herein, Defendant denies the remaining averments in the
Paragraph.
21. Defendant denies the averments in Paragraphs twenty-nine and believes that
Exhibits B and C, which have only been produced to this court in altered
photocopy form eliminating the fax headers appearing on the original
photocopies as presented to Defendant in a deposition in another action,
have been intentionally altered to reflect dates different from when they
were originally transmitted in an effort to mislead and deceive this court and
to be used for publicity purposes to hide frauds committed by Plaintiffs.
22. Defendant denies the averments in Paragraphs thirty, thirty-one, thirty-two,
thirty-three, thirty-six, thirty-nine .
23. Defendant admits the averments in Paragraph thirty-four, thirty-five, and
thirty-seven and thirty eight, but denies reference in thirty-eight that he
made any profit from the stock manipulation intended to assist SLMI.
24. Answering the averments in Paragraph forty, Defendant admits that he
spoke with Chris Belland various times during 2000, but denies any
nefarious intent.25. Answering the averments in Paragraph forty-one, Defendant admits that he
sold two blocks of stock at a discount to pay margin calls and employee
salaries of SLMI and otherwise denies the averments.
26. Defendant denies the averments in Paragraphs forty-two, forty-three, forty-
four and forty-five.
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27. Answering the averments in Paragraph forty-six, Defendant admits that Stan
Lee while Chairman of SLMI, in concert with his attorney-business partner
Arthur Lieberman, violated his fiduciary duties to the company by
attempting to breach his own employment agreement and rights assignmenton the eve of filing for Chapter 11 bankruptcy protection in order to defraud
shareholders of SLMI and the Bankruptcy Court by creating artificial
grounds to argue that the Primary Asset of the Company, as described in the
10KSB filed with the SEC in March, 2000, the Employment-Rights
Assignment Agreement he made with SLMI on October 15, 1998, was
legally terminated by use of a demand letter unsupported by any other legal
actions. Defendant denies that the SLE Employment Agreement was ever
legally terminated, or that the Rights Assignment part of that agreement was
ever affected by any attempt to terminate the Employment part of the hybrid
Agreement.
28. Defendant denies the averments in Paragraphs forty-seven, forty-eight.
29. Defendant admits the averments in Paragraph forty-nine.
30. Answering the averments in Paragraph fifty, Defendant admits that (a) a
document entitled Asset Purchase Agreement appears to have been executed
on or about November 2001 by Stan Lee, in his capacity as agent of SLC,
LLC, a California Limited Liability Company, as purchaser, and the
Estate of Stan Lee Media, Inc. a Delaware corporation and Stan Lee Media,
a Colorado corporation, as debtors; (b) a document entitled Amendment to
Asset Purchase Agreement appears to have been executed on or aboutJanuary 2002 by Stan Lee, in his capacity as agent of SLC, LLC, a
California Limited Liability Company, as purchaser; (c) another document
also entitled Amendment to Asset Purchase Agreement appears to have been
executed on or about February 2002 by Stan Lee, in his capacity as
President of SLC, LLC, a California Limited Liability Company, as
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purchaser, and Wild Brain, Inc. as a creditor to SLMI during the
bankruptcy proceedings; (d) the documents contain provisions regarding the
proposed acquisition by SLC, LLC, as purchaser of certain intellectual
properties and produced entertainment projects of SLMI, including TheAccuser, The Drifterand Stans Evil Clone akaEvil Clone, which were
specified to be developed by SLC, LLC with very specific conditions for the
manner in which SLC, LLC was to be established and managed to solely
and exclusively benefit creditors, lenders and shareholders of SLMI NOT
any insiders of SLMI, and benchmarks provided for guaranteed minimum
payments for the assets with a right of reversion of all the assets in the event
that the benchmarks were not met; and (e) the totality of the agreements as
amended were approved by an Order of the Bankruptcy Court in the
Bankruptcy Case on or about April 11, 2002 based on sworn Declarations
that no SLMI insiders other than Stan Lee would in any way benefit from
the sale. Except as expressly admitted herein, Defendant denies the
remaining averments in the Paragraph.
31. Answering the averments in Paragraph fifty-one, Defendant admits that Stan
Lee, Gill Champion, as directed by their partner and lawyer Arthur
Lieberman, and/or the other principals of POW! Entertainment, Inc. and
QED Productions, LLC, decided to form POW! Entertainment, Inc. and
QED Productions, LLC,six months before concluding a Court approved
sale of assets to a phantom entity- SLC LLC, warranted to have been in
good standing and capable of contracting, with the intention of deceiving thecourt and creditors regarding the establishment and use of a Special Purpose
Entity named SLC LLC that would be the purchaser of assets of SLMI
based on Stan Lee's good faith promise to exploit those assets exclusively
for the benefit of shareholders and creditors; and thereafter attempted
wrongfully, without the knowledge of the bankruptcy court or creditors and
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illegally to transfer assets of SLMI to POW! Entertainment, Inc. and QED
Productions, LLC, instead of obeying the Bankruptcy Courts April 11, 2002
Order by conveying the assets to SLC, LLC, a California limited liability
company. Except as expressly admitted herein, Defendants deny theremaining averments in the Paragraph.
32. Defendant denies the averments in Paragraph fifty-two and has personal
knowledge that as of October, 2006, neither the creditor's committee nor the
DIP Lender knew that Plaintiffs had transferred assets without Bankruptcy
Court approval to POW Entertainment, without notice or payment of any
kind to them or SLMI. The April 11, 2002 Order of the bankruptcy Court
specifically includes warranty clauses made by Stan Lee that the purchaser
approved by the court, intended to be a juridical entity existing under the
laws of California, was a duly established California LLC in good standing
in which Stan Lee warranted he was the President, capable of contracting
and performing all of the undertakings that were painstakingly crafted to
assure and secure his performance. Based on information recently obtained,
this was an elaborate hoax and fraud on the federal bankruptcy court, the
creditors, lenders and shareholders of SLMI and the new shareholders of
POW Entertainment which offered and sold its shares to the public.
33. Answering the averments in Paragraph fifty three, Defendant admits that
Plaintiffs succeeded in successfully hiding their illegal and nefarious actions
successfully from all involved until the US Trustee, after being notified by
Defendant and others, caused the five and one half year sham of a Chapter11 Reorganization proceeding to be dismissed for cause by virtue of
malfeasance and misfeasance of Plaintiffs, including causing SLMI to be
dissolved administratively by the State of Colorado when they had a court
imposed and fiduciary duty to maintain the company in good standing.
There were huge operational differences between QED, a subsidiary of a
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public company POW, owned and controlled by SLMI insiders Lieberman,
Champion, Lee and Kobyashi, which never attempted to pay anything for
the assets they looted from SLMI to capitalize yet another public company
and a Special Purpose Entity intended to be created exclusively to exploitassets of SLMI for the benefit of creditors, lenders and shareholders of
SLMI, NOT for the shareholders of POW Entertainment and malevolent
SLMI insiders. Defendant denies the remaining the averments in the
Paragraph.
34. Defendant denies the averments in Paragraph fifty-four.
35. Defendant admits the averments in Paragraph fifty-fifty and further admits
that the Courts ruling should have been mooted with the election by a
unanimous vote of all participating shareholders in the court supervised
Annual Shareholder's Meeting and Director's election held in December,
2007, of Nesfield, Galloway and Blumen as Directors, incorporated into an
order of the Court in Colorado on May 12, 2008.
36. Defendant denies the averments in Paragraph fifty-six.
37. Defendant lacks sufficient knowledge or information to form a belief as to
the truthfulness of the averments in Paragraph fifty-seven, fifty-eight, and on
that basis deny the averments.
38. Defendant denies the averments in Paragraph fifty-nine and sixty.
39. Answering the averments in Paragraph sixty-one, Defendant admits that (a)
the registrant of the website at www.stanleemedia.net is Defendant James
Nesfield, who at the time he registered the website was acting solely in hiscapacity as authorized agent of SLMI and not in his individual capacity; (b)
such registration was accomplished with the consent and authorization of the
then calculated majority of shareholders of SLMI that remained after the
settlement of the Sahreholders Class Action against Stan Lee and other
Directors of the company and after all other shares that should have been
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voided due to settlements were calculated; Except as expressly admitted
herein, Defendants deny the remaining averments in the Paragraph.
40. Answering the averments in Paragraph sixty-two, Defendant admits that (a)
in their capacity as equitable agents of SLMI, and not in any other capacity,Defendants have used Stan Lees name, the signature of Stan Lee and
photographs of Stan Lee, as they are authorized to do pursuant to the
Assignment of Rights Agreement, which was executed by Stan Lee in favor
of SLMI on or about October 15, 1998; (b) at times, certain content
including artwork relating to The Accuser, a link to www.stanleereturns.org,
webisodes ofThe AccuserandEvil Clone, and artwork relating to The
Drifter, were available on the websites for the sole purpose of notifying the
world of Defendant' efforts to recover assets belonging to SLMI and
exposing the frauds of the Plaintiffs in illegally converting assets of SLMI
for their own benefits. Except as expressly admitted herein, Defendant
denies the remaining averments in the Paragraph.
41. Defendant denies the averments in the first sentence of Paragraph sixty-
three. Except as specifically denied herein, Defendant lacks sufficient
knowledge or information to form a belief as to the truthfulness of the
averments, and on that basis deny the averments.
42. Defendant lacks sufficient knowledge or information to form a belief as to
the truthfulness of the averments in Paragraph sixty-four, and on that basis
denies the averments.
43. Defendant denies the averments in Paragraph sixty-five. Defendant furtheradmits and alleges as follows: (a) Plaintiff Stan Lee executed in SLMIs
favor an Assignment of Rights Agreement dated October 15, 1998
specifically authorizing SLMI to own, copy, distribute, license and exploit
the marks and properties described in the SAC; and (b) at all times material
hereto, all Defendants have acted in their capacity as agents of SLMI, and
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not in their individual capacities with regard to SLMI; and (c) Plaintiffs have
no legal authority to use or control the Properties.
44. Defendant denies the averments in Paragraph sixty-six and based on
Defendant's personal knowledge and video taped admissions made by StanLee knows without a doubt that Stan Lee intended to assign everything in
the creative universe he owned as of October 15, 1998, to his new dot com
company SLMI, including all claims and rights to any intellectual property
he owned on that date, including his co-creator's rights to his creations for
Marvel.
45. Answering the averments in Paragraph sixty-seven, Defendant admits that
(a) in their capacities as agents of SLMI and its shareholders, and not in their
individual capacities, Defendants have asserted that SLMI is the owner and
controller of the properties identified in the SAC; and (b) Defendants, in
their capacity as agents of SLMI whose unanimous support by all
shareholders who participated in the last annual shareholder's meeting called
at the substantial expense of Christopher Belland, could have legally ratified
nunc pro tunc all their actions, and not in their individual capacities, have
asserted that SLMI is the owner ofcertain rights, income and profits in
various characters and properties co-created by Stan Lee in association with
Marvel Entertainment, Inc. and its affiliates and predecessors in interest,
including but not limited to Spider-Man, The Fantastic Four, The Incredible
Hulk, X-Men and various other valuable characters and properties.
Defendant further admits and alleges that the matter between SLMI andMarvel has absolutely nothing to do with the properties or claims at issue in
the instant action, and it is not clear what relevance the Marvel/SLMI matter
has to do with anything in this case. It is Defendant's belief that allegations
by Plaintiffs (who are alter egos of Marvel regarding this issue) denying
claims that SLMI has legally asserted in Federal Court in New York against
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Marvel to enforce rights assigned by Stan Lee to capitalize SLMI, is a new
effort by Marvel to delay litigating the issues raised against it in a Federal
civil action in New York. Except as expressly admitted and alleged herein,
Defendant denies the remaining allegations of the Paragraph.46. Defendant denies the averments in Paragraphs sixty-eight and sixty-nine.
47. Answering the averments in Paragraph seventy, Defendant realleges his
answers to Paragraphs one through sixty-nine of the SAC.
48. Defendant denies the averments in Paragraphs seventy-one through eighty-
one, inclusive.
49. Answering the averments in Paragraph eighty-two, Defendant realleges his
answers to Paragraphs one through eighty-one of the SAC.
50. Defendant denies the averments in Paragraphs eighty-three through ninety.
51. Answering the averments in Paragraph ninety-one, Defendant realleges his
answers to Paragraphs one through ninety of the SAC.
52. Defendant denies the averments in Paragraphs ninety two through ninety-
eight.
53. Answering the averments in Paragraph ninety-nine, Defendant realleges his
answers to Paragraphs one through ninety-eight of the SAC.
54. Defendant denies the averments in Paragraphs one hundred through one
hundred four.
55. Answering the averments in Paragraph one hundred five, Defendant
realleges his answers to Paragraphs one through one hundred four of the
SAC.56. Defendant denies the averments in Paragraphs one hundred six through one
hundred thirteen.
57. Answering the averments in Paragraph one hundred fourteen, Defendant
realleges his answers to Paragraphs one through one hundred thirteen.
58. Defendant denies the averments in Paragraph one hundred fifteen.
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59. Defendant admits the averments in the first three sentences of Paragraph one
hundred sixteen. Defendant denies the remaining averments in the
Paragraph.
60. Defendant denies the averments in Paragraphs one hundred seventeenthrough one hundred twenty and maintains that the rights to Stan Lee's name
and likeness remain assets of SLMI as assigned forever by Stan Lee in his
Rights Assignment Agreement dated October 15, 1998, re-ratified as
modified on October 9, 1999 as filed by Stan Lee with the SEC in form
10KB on March 30, 2000, while Chairman of SLMI.
61. Answering the averments in Paragraph one hundred twenty-one, Defendant
realleges his answers to Paragraphs one through one hundred twenty of the
SAC.
62. Defendant denies the averments in Paragraphs one hundred twenty-two
through one hundred twenty-eight.
63. Answering the averments in Paragraph one hundred twenty-nine, Defendant
realleges his answers to Paragraphs one through one hundred twenty-eight.
64. Answering the averments in Paragraph one hundred thirty, Defendant lacks
sufficient knowledge or information to form a belief as to the truthfulness of
the averments regarding plaintiffs alleged conduct and motives, and on that
basis deny the averments. Defendant denies the remaining averments in the
Paragraph, and further denies that QED and POW lawfully acquired any
rights to SLMI properties and could not be damaged by efforts by SLMI and
its agents to hold Plaintiff's accountable for their thefts of SLMI property.65. Defendant denies the averments in Paragraphs one hundred thirty-one and
one hundred thirty-two.
66. Answering the averments in Paragraphs one hundred thirty-three and one
hundred thirty-four, Defendant lacks sufficient knowledge or information to
form a belief as to the truthfulness of the averments, and on that basis deny
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the averments, however Defendant denies specifically that Plaintiffs could
enter into any valid contract with third parties regarding assets belonging to
SLMI.
67. Defendant denies the averments in Paragraph one hundred thirty five.68. Answering the averments in Paragraph one hundred thirty-six, Defendant
realleges his answers to Paragraphs one through one hundred thirty-five.
69. Answering the averments in Paragraph one hundred thirty-seven, Defendant
lacks sufficient knowledge or information to form a belief as to the
truthfulness of the averments regarding plaintiffs alleged conduct and
motives, and on that basis deny the averments. Defendant denies the
remaining averments in the Paragraph, and further deny that QED lawfully
acquired any rights to SLMI properties.
70. Defendant lacks sufficient knowledge or information to form a belief as to
the truthfulness of the averments in Paragraphs one hundred thirty-eight, and
on that basis deny the averments.
71. Defendant denies the averments in Paragraphs one hundred thirty-nine
through one hundred forty-two and reiterates his position that all of his
actions have been intended to vex and hold accountable Plaintiffs for their
frauds and conversions of property and claims owned by SLMI.
72. Answering the averments in Paragraph one hundred forty-three, Defendant
realleges his answers to Paragraphs one through one hundred forty-two.
73. Answering the averments in Paragraphs one hundred forty-four and one
hundred forty-five, and one hundred forty-seven Defendant admits that anyfilings with the Secretary of State are matters of public record and speak for
themselves. Except as specifically admitted herein, Defendant lacks
sufficient knowledge or information to form a belief as to the truthfulness of
the averments, and on that basis deny the averments.
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74. Answering the averments in Paragraph one hundred forty-six, Defendants
admit that their public statement speak for themselves. Except as
specifically admitted herein, Defendant lacks sufficient knowledge or
information to form a belief as to the truthfulness of the averments, and onthat basis deny the averments.
75. Defendant denies the averments in Paragraphs one hundred forty-eight and
one hundred forty-nine.
76. Answering the averments in Paragraph one hundred fifty, Defendant lacks
sufficient knowledge or information of Colorado law to form a belief as to
the truthfulness of the averments which are not accompanied by a citation
to any authority and on that basis deny the averments.
77. Defendant denies the averments in Paragraphs one hundred fifty-one
through one hundred fifty-four and vehemently objects to any claims for
equitable relief in connection with Plaintiff's racketeering in looting,
destroying and attempting to annihilate SLMI through egregious and illegal
violations of fiduciary duties as directors, officers of SLMI and then as
Debtors in Possession and Trustees of SLMI when they looted assets, made
and aided and abetted false SEC filings and bank loans, filed claims
rightfully belonging to SLMI that were settled for in excess of $10 million
personally benefitting Plaintiffs at the expense of SLMI as part of a
collusive effort between Plaintiffs and the management and chief
shareholder of Marvel entertainment to hide claims against Marvel legally
owned by SLMI that are valued in the tens of millions of dollars.78. Defendant denies the averments in Paragraphs one hundred fifty-five
through on hundred sixty nine, which averments are known by Plaintiffs and
their counsel to be patently false and are now supported by newly
discovered (after 10 years), patently fabricated, evidence originating from
Arthur Lieberman, the former IP lawyer for SLMI and Stan Lee's personal
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lawyer turned Svengali and partner in the fraudulently capitalized POW
Entertainment who is the mastermind behind Plaintiff's efforts to loot the
valuable assets and claims of SLMI while abusing the judicial process to
prejudice those who are making every effort to expose their frauds and holdthem accountable.
79. Answering the averments in Paragraph one hundred seventy, Defendant
realleges their answers to Paragraphs one through one hundred sixty-nine.
80. Answering the averments in Paragraphs one hundred seventy-one through
one hundred seventy-six, Defendant lack sufficient knowledge or
information to form a belief as to the truthfulness of the averments regarding
the conduct of other individual defendants, and on that basis deny the
averments. Defendant denies the remaining averments in the Paragraphs.
81. Answering the averments in Paragraph one hundred seventy-seven,
Defendant realleges his answers to Paragraphs one through one hundred
seventy-six.
82. Defendant denies the averments in Paragraphs one hundred seventy-eight
through one hundred seventy-nine.
83. Answering the averments in Paragraph one hundred eighty, Defendant
admits that a controversy exists with Plaintiffs. Defendant denies the
remaining averments.
84. Answering the averments in Paragraph one hundred eighty-one, Defendant
lacks sufficient knowledge or information of Plaintiffs state of mind, and on
that basis deny the averments. Defendant denies the remaining averments.85. Answering the averments in Paragraph one hundred eighty-two, Defendant
realleges his answers to Paragraphs one through one hundred eighty-one.
86. Answering the averments in Paragraph one hundred eighty-three, Defendant
denies that the representations set forth are false. Defendant lacks sufficient
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knowledge or information to form a belief as to the truthfulness of the
remaining averments, and on that basis denies the averments
87. Answering the averments in Paragraph one hundred eighty-four, Defendant
admits that a controversy exists between them and Plaintiffs, but denies thatPlaintiffs are entitled to any equitable relief whatsoever due to failing to do
equity and having the uncleanest of hands along with all of their other
appendages. Defendant denies the remaining averments.
88. Answering the averments in Paragraph one hundred eighty-five, Defendant
lacks sufficient knowledge or information of Plaintiffs state of mind, and on
that basis denies the averments. Defendant denies the remaining averments.
Defendant has no recollection of posting the blog entry described in
Paragraphs 186- 193. In the event that defendant did post that entry, which is
the kind of entry Plaintiff has posted and similar to one he did post on his
blog site at www.peterfpaul.com, then Defendant would maintain that Stan
Lee's video taped deposition from February, 2005, speaks for itself in
capturing Stan Lee admitting to being illegally reimbursed a $100,000
federal campaign contribution made by him, in his name.
AFFIRMATIVE DEFENSES
Facts Common To All Affirmative Defenses
The following averments are common to all of the following affirmative
defenses asserted by the Defendants:
1. Defendant has exercised his first amendment rights to petition thecourts and speak freely about malfeasance, fraud, theft and related
administrative illegalities that he witnessed or discovered committed
by Plaintiffs and those who colluded and conspired with them.
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2. Contrary to the allegations of the SAC, the Defendant has done
nothing wrong, improper or illegal, and in SACt, Defendant is the
primary reason SLMI has not been entirely annihilated by Plaintiffs to
hide and obstruct their accountability for their misconduct and theirfraudulent ownership and conversion of assets rightfully owned by
Stan Lee Media Inc..
3. But for the Defendant, SLMI shareholders would not know of the
assets that were hidden from them and wrongfully converted by the
Founder of SLMI, Stan Lee as directed by his Mastermind partner
and lawyer, Arthur Lieberman, who also directed the former COO and
Controller of SLMI in a perfect orchestration of blatant corruption
that has taken the true property of the company during and after it was
dismissed from bankruptcy for cause due to malfeasance of Plaintiffs.
4. In fact, the only reason Plaintiffs have asserted a derivative action in
the instant case is to attempt to maintain control of the entity that they
attempted to destroy in bankruptcy and then thwarted shareholder's
efforts to reinstate the company they illegally caused to be
administratively dissolved by the State of Colorado because of their
unlawful refusal to maintain the company in good standing while
Debtors in Possession. However, based solely upon the extraordinary
efforts of Defendant, SLMI and its records reportedly remain intact.5. The Defendant has done all things necessary and proper to save SLMI
from the abuse and neglect it had suffered at the hands of the
Plaintiffs, expose the malfeasance of Plaintiffs and help those who are
spending millions in legal costs and fees to recover for the
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shareholders of SLMI millions in assets that have been hidden and
looted by Plaintiffs.
6. In order to provide both a legal and factual basis for the currentmanagement and state of affairs of SLMI, it is necessary to provide
the Court with the following information and evidence regarding
SLMI.
7. Stan Lee Entertainment, Inc., a Delaware Corporation and
predecessor in interest to SLMI, was incorporated on October 13,
1998.
8. On October 15, 1998, Stan Lee, assigned everything he owned in the
creative universe to SLMI and granted to SLMI the exclusive rights to
his name and likeness in a hybrid Employment and Rights
Assignment Agreement signed by Lee on both October 20 and 21 of
1998 one month before executing a new similar agreement with
Marvel..
9. On April 14, 1999, Stan Lee Entertainment, Inc. merged into Stan Lee
Media, Inc., a Delaware Corporation, another predecessor in interest
to SLMI. On or about August 12, 1999, by reverse merger with a
company by the name of Boulder Capital Opportunities, Inc., a
Colorado corporation, Stan Lee Media, Inc., a Delaware corporation,
became a Colorado corporation and thereafter was publicly traded for
a time on the New York Stock Exchange.10. On October 9, 1999, Stan Lee, acting under advice of his personal
counsel, modified his October 15, 1998 Rights Assignment and
Employment Agreement to forgive a 10% profit participation grant to
him in order to help enhance the share value of the company's stock in
which he was the largest shareholder. On that date Lee ratified the
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October 15 1998 Agreement in all other respects and never challenged
the date of its execution
11. On or about February 16, 2001, SLMI filed for bankruptcy protection
pursuant to Chapter 11 in the Central District of California.12. The SLMI bankruptcy was pending between February 16, 2001 and
November 14, 2006, a period of almost five (5) years and nine (9)
months. During the entirety of the bankruptcy proceedings, Stan Lee
and Ms. Junko Kobayashi were the purported representatives and
fiduciaries of SLMI. In SACt, in the SAC Plaintiffs allege that
Junko Kobayashi was appointed by SLMIs board of directors to
serve as the authorized representative of SLMI during the
Bankruptcy Case. Thus Stan Lee, who has stated he remained as the
sole remaining Director of SLMI throughout the bankruptcy and
Junko Kobayashi were positioned at the gates of SLMIs assets.
13. On or about November 7, 2006, counsel of record for SLMI filed a
Notice of Non-Opposition to Dismissal of Chapter 11 Bankruptcy
Cases, which included an allegation that there were no
unencumbered assets over and above the post-petition secured debt,
which may be monetized for the benefit of creditors and requested
permission to destroy all property, files and records of SLMI.
14. On or about November 14, 2006, SLMIs bankruptcy petition was
dismissed by verbal order of the bankruptcy judge.
15. On or about November 15, 2006, and in an emergent attempt to savethe property, files and records of SLMI from imminent destruction,
Defendant James Nesfield, after acquiring the proxies of a majority of
the then known, eligible voting shareholders of SLMI and after
obtaining the authority of said majority of shareholders of SLMI,
wrote a letter to SLMIs bankruptcy counsel on behalf of the
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concerned shareholders he represented asking for said counsel to turn
over and not destroy SLMIs property, records and files.
16. On or about November 16, 2006, bankruptcy counsel for SLMI wroteback to James Nesfield confirming that the bankruptcy cases had been
dismissed by verbal order of the bankruptcy judge on November 14,
2006, and assuring James Nesfield that steps were being taken to
preserve SLMIs records.
17. On November 27, 2006, proper notice of a Special Meeting of
Shareholders of Stan Lee Media, Inc. of Colorado was sent to all
interested parties, with more than 75% of the shareholders being
notified by direct mailing and the remaining shareholders being
notified by publication of the meeting on Media-Newswire.com.
18. On December 7, 2006, a special meeting of the shareholders of SLMI
was held and a majority of the known, eligible shareholders appeared
at the meeting. None of the Plaintiffs who received notice of the
meetings made appearance or objected.
19. The proposed resolutions at the meetings were passed by unanimous
vote of those present.
20. Those present at the meetings also ratified all previous actions of the
Defendants, and officers and directors were properly appointed and
SLMI has been conducting business ever since.
21. Contrary to the false statements in the SAC, Defendants have beenacting with the best of intentions, have published and noticed all of
their actions to all interested parties, including publishing their efforts
and intentions on the internet corporate site of SLMI, and have
conducted themselves with the best interests of the shareholders of
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SLMI under the circumstances that the company had been rendered
insolvent and dissolved by the actions of Plaintiffs.
22. As of this date, SLMI remains a global branded content creation,
production and marketing company founded by pop culture icon StanLee. SLMI continues to attempt to conduct business and intends to
continue with its revised business plan of conceiving, creating, co-
creating, producing, marketing and licensing branded characters and
story franchises for entertainment, merchandising and promotional
exploitation worldwide.
23. In the SLMI bankruptcy proceedings, what Judge Lax ordered and
what actually happened are two very different things. Specifically,
during the SLMI bankruptcy, the Honorable Judge Kathleen T. Lax,
United States Bankruptcy Court Judge, Central District of California,
San Fernando Valley Division, presided over the SLMI bankruptcies,
Case No. SV 01-11329 KT, jointly administered with Case No. SV
01-11331 KT, entered an Order dated April 11, 2002, that authorized
the sale of certain assets of SLMI to a company by the name of SLC,
LLC. The assets authorized to be sold by Order are the same assets at
issue in the SAC.
24. The April 11, 2002 Order was entered as a result of a motion
supported by a sworn declaration, a supplement to the motion, and a
notice of hearing. As is clear from these documents, all interested
parties, as well as Judge Lax, were considering and ultimatelyapproved the sale of the assets to SLC, LLC, a purported California
limited liability company, based on warranties provided by Stan Lee.
Although the April 11, 2002 Order speaks for itself, the Order
specifically: (1) authorized the agreement between Stan Lee, on
behalf of SLC, LLC, and SLMI, debtor-in-possession (attached to
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the April 11, 2002 Order), to be consummated; (2) authorized the sale
of certain of SLMIs assets to an entity by the name of SLC, LLC,
which entity was specifically represented by Stan Lee to be a
California limited liability company; (3) involved not only Stan Lee,on behalf of SLC, LLC, but also a secured creditor by the name of
Wild Brain, Inc. and the Official Committee of Unsecured Creditors;
(4) not only limited the type of assets authorized to be sold, but also
specifically designated the entity to purchase the assets as SLC, LLC,
a California limited liability company; (5) required that the articles of
organization reflect that SLC, LLC be a special purpose entity,
thereby expressly restricting the business of SLC, LLC to only the
exploitation of the specific assets being sold and specifically
prohibiting SLC, LLC from conducting any other business; (6)
prohibited SLC, LLC from assigning, conveying, encumbering, or
otherwise transferring the assets to anyone without the express written
consent of SLMI; and (7) required that any purported assignment or
transfer of the assets at issue be approved by the Bankruptcy Court.
Thus, the specific instructions in the Order to Stan Lee, on behalf of
SLC, LLC, were not optional, and that Stan Lee did not have any
authority whatsoever unilaterally to change the Order and substitute
his own judgment based upon what he believed to be more convenient
to him and his cohorts.
25. The purpose for obtaining approval and authorization to sell assetsduring any bankruptcy is to ensure that no insider or equity holder of
the debtor-in-possession wrongfully benefits from a particular
transaction to the detriment of the creditors and the shareholders of
the debtor-in-possession. In SACt, Judge Laxs Order specifically
makes findings required in any such situation, such as (1) the terms
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and conditions of the Sale Agreement is in the best interest of the
Debtors and their estates; (2) the terms of the sale of the Assets to
Buyer [SLC, LLC] are the result of good faith and arms length
negotiations between the Debtors, the Official Committee ofUnsecured Creditors (the Committee), Wild Brain and Buyer, and
the Debtors have determined . . . that the Assets should be sold to
Buyer [SLC, LLC]. . . and that the consideration to be realized by the
Debtors is fair and reasonable; and (3) that Buyer [SLC, LLC] has
acted, and is acting, in good faith, and is therefore entitled to the
provisions afforded to a good faith purchaser under 11 U.S.C.
363(m). Furthermore, it is clear that Judge Laxs Order and the
agreement incorporated therein were crafted with the intent of
maintaining control over the manner in which these very valuable
assets were being managed.
26. Even though Judge Lax and all of the interested parties expended
great efforts to negotiate and finalize the terms and conditions of the
April 11, 2002 Order, Stan Lee, by his own admission in the SAC,
unilaterally and without any authority, decided not to close on the sale
of the assets to SLC, LLC.
27. In fact, Stan Lee admits that he never even set up SLC, LLC, even
though for the approximately six months from November of 2001
through April 11, 2002, he allowed the Bankruptcy Judge, Trustee,
creditors and all interested parties to believe that he was doing so.Furthermore, Stan Lee went so far as to sign a document that was
filed with the Court in support of the proposed sale of assets,
warranting and representing that SLC, LLC was, at the time of that
filing, an existing limited liability company pursuant to the laws of the
State of California.
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28. In short, there was never any closing and never any transfer or sale of
assets to SLC, LLC, as ordered. Instead, Plaintiffs now admit in the
SAC that Stan Lee caused the assets to be transferred to QED.
Interestingly, Plaintiffs fail to provide any date or dates upon whichthe purported transfers from SLMI to QED took place. Defendants
are aware of only one documented transfer by SLMI to QED, that
being the fraudulent assignment of copyrights by Junko Kobayashi as
authorized representative of SLMI to Gill Champion, as agent of
QED, August 7, 2006.
FIRST AFFIRMATIVE DEFENSE
(Failure to State a Cause of Action Upon Which Relief May be Granted)
As his first affirmative defense, Defendant avers that Plaintiffs have failed to
state any cause of action upon which relief may be granted. Moreover, at all times
material hereto. For this additional reason, Plaintiffs have failed to state any cause
of action upon which relief may be granted as against the defendant.
SECOND AFFIRMATIVE DEFENSE
(Lack of Standing)
As his second affirmative defense, Defendant avers that none of the
Plaintiffs (except SLMI if SLMI were properly a plaintiff) have any legal
enforceable rights of any kind to any of the assets at issue in this action and,
therefore, have no standing of any kind to bring the instant action against
Defendant. All of Plaintiffs purported claims allegedly arise out of and originate
with the sale of assets agreement, as amended, and as incorporated into theBankruptcy Courts April 11, 2002 Order. Because the sale of assets agreement,
as amended, and the April 11, 2002 Order clearly and unambiguously state that
none of the Plaintiffs are entitled to the ownership or rights to the assets at issue,
and that none of Plaintiffs could be the assignee of ownership rights without
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further order of the court and written approval of SLMI, Plaintiffs lack standing to
bring their claims against these individual Defendants.
THIRD AFFIRMATIVE DEFENSE
(Unclean Hands)As his third affirmative defense, Defendants aver that, to the extent the
Plaintiffs (except SLMI if SLMI were properly a plaintiff) assert any equitable
claims, said Plaintiffs claims are barred because they come to this court with
unclean hands and are not entitled to any form of equitable relief.
FOURTH AFFIRMATIVE DEFENSE
(Fraud)
As his fourth affirmative defense, Defendant avers that Plaintiff, Stan Lee
and Gill Champion acting in concert with their partner and lawyer, Arthur
Liebreman, and other principals of both POW! and QED, based upon the above-
mentioned SACts have committed certain frauds upon the Bankruptcy Court, the
Bankruptcy Judge, the Bankruptcy Trustee, the Debtor in Possession, SLMI, the
creditors of SLMI and the shareholders of SLMI, the shareholders of Marvel
Entertainment, the lenders to Marvel Studios, among others, by procuring the sale
of assets agreement, as amended, and the April 11, 2002 Order authorizing said
sale of assets, and by thereafter, intentionally disregarding said agreement and
order for their own personal financial gain, and to the financial detriment of SLMI
and its shareholders and creditors, and thereafter ignoring all other provisions of
said agreement and Order, and filing personal claims against Marvel Entertainment
based on assets legally owned by SLMI. As a result of such frauds, Plaintiffsshould be denied all relief sought in the SAC. In addition, Plaintiffs paid no
consideration for the assets looted from SLMI and failed to enforce the
Reconveyance right retained by SLMI under the Sale of Assets Agreement
providing that all assets sold thereunder would be reconveyed within 30 days of
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written notice by SLMI to reconvey said assets if the benchmark development
deals and payments were not made- which have never been made.
FIFTH AFFIRMATIVE DEFENSE
(Forfeiture of Contract Rights, If Any)As his fifth affirmative defense, Defendant avers that, to the extent Plaintiffs
had any contractual rights of any kind, Plaintiffs forfeited any such rights pursuant
to the sale of assets agreement, as amended, and the Bankruptcy Court Order dated
April 11, 2002, by engaging in conduct that contradicted the terms of said
agreement and Order and, in the case of Stan Lee, was in direct contempt of the
April 11, 2002 Order. Additionally, said contract rights were forfeited by the
complete failure on the part of any of the Plaintiffs (except SLMI if SLMI were
properly a plaintiff) to pay any amounts due and owing SLMI and its creditors
pursuant to said agreement and order.
SIXTH AFFIRMATIVE DEFENSE
(Violation of 11 U.S.C. 362)
As their sixth affirmative defense, Defendant avers that Plaintiffs, Stan Lee,
Gill Champion, POW!, by and through its agents, and QED, by and through its
agents, committed certain wrongful and contemptuous acts in direct violation of
the Bankruptcy Courts April 11, 2002 Order, and thereby wrongfully and illegally
acquired possession and thereafter used certain assets rightfully belonging to
SLMI, then a Debtor in Possession before a United States Bankruptcy Court. The
purported transfer of the intellectual properties at issue from a debtor-in-
possession, while the Bankruptcy Case was still pending, without any authority todo so, is an involuntary and unauthorized transfer. Involuntary transfers of assets,
particularly those which are effected by persons having full knowledge of a
Bankruptcy Court Order to the contrary, are governed by 11 U.S.C. 362, which
specifically states that the filing of a bankruptcy petition, as in the case of SLMI,
operates as a stay, . . . , ofany act to obtain possession of property of the estate
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or of property from the estate or to exercise control over property of the estate.
Involuntary transfers of assets in violation of 11 U.S.C. 362 are void ab initio.
Therefore, as a matter of law, any purported assignment of assets by Plaintiffs was
void from its inception and had no legal effect whatsoever. As a result, SLMIcontinues to own and hold all rights, interest and copyrights in and to the
intellectual properties at issue, and the Plaintiffs have absolutely no basis to be
suing the Defendants.
SEVENTH AFFIRMATIVE DEFENSE
(Statute of Limitations)
As his seventh affirmative defense, the Defendant avers that the Plaintiffs
claims are barred by the applicable statute of limitations with regard to each and
every legal cause of action alleged.
EIGHTH AFFIRMATIVE DEFENSE
(Doctrine of Laches)
As his eighth affirmative defense, the Defendant avers that the Plaintiffs
claims are barred by the doctrine of laches with regard to each and every equitable
cause of action asserted.
NINTH AFFIRMATIVE DEFENSE
(Doctrine of Acquiescence)
As his ninth affirmative defense, the Defendant avers that the Plaintiffs'
claims are barred by the doctrine of acquiescence with regard to each and every
equitable cause of action, and in connection with any action taken by Defendant
while he worked for SLMI from 1999-2000.
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TENTH AFFIRMATIVE DEFENSE
(Failure to State Cause of Action for Punitive and/or Exemplary Damages)
As his ninth affirmative defense, the Defendant avers that the Plaintiffs have
failed to state any cause of action upon which relief may be granted in the form ofpunitive and/or exemplary damages of any kind.
PRAYER FOR RELIEF
WHEREFORE, Defendants pray as follows:
1. That Plaintiffs take nothing by reason of the Second Amended
Complaint, and that judgment be rendered in favor of Defendant;
2. For a judicial declaration that Plaintiffs have no rights to any of the
assets at issue in this action;
3. That Defendant be awarded his costs of suit incurred in defense of this
action;
4. That Defendant be awarded their reasonable attorneys fees incurred in
this action should he retain attorneys; and
5. For such other relief as the Court deems proper.
DATED: October 3, 2008 PETER F PAUL, Pro Per
By:Peter F Paul1854A Hendersonville Rd #10Asheville, NC 28803
(828) 776 4434
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DEMAND FOR JURY TRIAL
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Defendants
hereby demand a trial by jury.
DATED: October 3, 2008 PETER F PAUL, Pro Per
By:Peter F Paul
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