Expanded Response

March 9th, 2015

There is a collateral attack of my criminal conviction in the form of a Motion Under 2255, Phillips v. U.S. Case No. 2:14-cv-01130, which I raise a number of constitutional violations in my original case (see Attachment A Attachment A 20140725 2255 Cover Form, Insert One, Concise Statements of Facts Attachment A 20140725 Concise Statement of Supporting Facts (conformed) Attachment A 20140725 Decl of Allison Goodman wExhibits (conformed) Attachment A 20140725 Decl of Reed Yurchak wExhibits (conformed)(reduced)) Including but not limited to the parade of frauds and inexplicable missing evidence in my favor at trial; there has always been much more to the story than what’s been publicized and admitted by the U.S. government.

Juanita Jardine (a.k.a. Jan Wallace) and Michael Cane (later known as Kyleen Cane), the key government witnesses in my case, are very real and truly successful frauds  (see Attachment B, Jan Wallace has a multi-million civil fraud judgment against her from 2006 using a complex fraud scheme – Attachment B 20100211 Thomas and Wong v. Jan Wallace (CV080634) Memorandum Decision). Kyleen Cane, at one time the attorney and board member at MOD Systems, Inc., has recently been indicted for a $300 million securities fraud case in New York (see Attachment C – Attachment C 20140715 US v Cane et al Case No 14-00399). Anthony Bay, Robert Arnold, and other seemingly credible directors, lawyers, or investors at MOD partnered with these two frauds to steal my stock in MOD, loot MOD of its cash, and fire all of its brilliant employees.

The collective two decade-long history of the Wallace/Cane fraudulent schemes is diverse, shocking, and real. They profited from conducting corporate espionage on unwary corporations then laundered money offshore to the Cayman Islands by using what is referred to as market manipulation, trading of restricted stock, and general “pumping and dumping.”  It begins with an attack that corporation’s founder/CEO with false allegations of wrongdoing in order to fuel shareholder dissent.

From the New York S.E.C and U.S. government press releases: “Discala and his company insiders, registered brokers, investment advisers, an attorney [Kyleen Cane] and corrupt investors designed an elaborate but fraudulent scheme built on lies, deceit and manipulated trading activity to defraud the securities markets and the investing public. They took companies with essentially no assets or activity and deceived the market into believing they were worth hundreds of millions of dollars through a dizzying round of insider and unauthorized trades. When the defendants stopped their criminal game of musical shares it was the unsuspecting investors who were left holding the bag. The defendants abused their positions of trust and preyed upon unsuspecting and elderly investors, oftentimes placing worthless stocks in their retirement accounts, to perpetrate this far-reaching fraud,” stated United States Attorney Lynch.

Despite my whistle blowing, complaints, and reporting of their crimes, I was ignored and instead accused of crimes, which led to my indictment—by beating me to the FBI and lying to them to accuse me of illegal activities before I could obtain my own evidence against the two, Wallace and Cane rid themselves of their biggest obstacle then took control of my corporation (with willing help from Bay, Jeffrey Smyth, Julia de Haan, and William Bromfield of Fenwick and West), depleted it of its funds, and left it worthless. Spawning litigation are all hallmarks of Wallace and Cane’s work while the recruitment of Bay, Smyth, Arnold, and others was a local touch that comes naturally to such talented con artists.

I attempted to report the racketeering to the authorities at the end of 2009 and in 2010 to the SEC, IRS, FBI, and in Federal Court, but was met with my criminal indictment instead. In 2014, after my release I sued for civil RICO (see Attachment D – Attachment D 20140303 Phillips v Cane et al RICO Complaint (Final) wExhibits A-S (Redacted)(Reduced)), but by then it was too late. Thankfully, the New York federal prosecutors indicted Attorney Kyleen Cane four months after my RICO complaint was filed, and at the end of February 2015, Jan Wallace will face trial in her Bankruptcy proceeding disallowing the fraud judgment for Thomas and Wong (see Attachment E – Attachment E 20140417 Complaint of Thomas & Wong v Wallace).

The true victims of the frauds and the government’s prosecution of me, however, are the brilliant employees and partners of MOD Systems, all of whom spent years of their lives building a great company only to have it burned to the ground.


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