Free Proposed Pretrial Order - District Court of Delaware - Delaware

Case 1:04-cv-01551-JJF Document 371-17 Filed 10/O4/2007 Page1 of 3
EXHIBIT 16

Case 1 :04-cv-01551-JJF Document 371-17 Filed 10/O4/2007 Page 2 of 3
EXHIBIT 16
The Trustee’s Statement of Miscellaneous Issues
The Trustee seeks to amend the complaint to include two paragraphs described in
the body ofthe pretrial order. A proposed revised pleading will be submitted. The first
paragraph incorporates the language of the Trustee’s answers to interrogatories, in which
the scope ofthe Trustee’s claims was made clear to the Family Defendants early in
discovery and before depositions. The second paragraph describes the claims that were
_ stated in answers to contention interrogatories at the end of fact discovery.
The claims described in the amendment are based on proofs which, in any event,
will be part of this case with regard to other claims. Specifically, the evidence that the
Family Defendants received above market rates is one of the elements that will be
addressed in proving their insider status. They acknowledge this and have an expert
witness on this subject. lt also will be addressed in response to the affirmative defense of
ordinary course of business. Similarly, the fact that the Family Defendants purchased
and SFC redeemed its stock is an element of proof supporting the claim that the Family
Defendants are insiders and in opposition to their affirmative defenses. Undisclosed
related party shareholders were used by Andrew Yao to enhance SFC’s appearance of
credit. worthiness.
Claims by the Trustee against Gagné in his capacity as a lawyer and Gagné in his
capacity as a Family defendant were all asserted in the same lawsuit. The individuals
who were involved in the Family Defendants transactions with SFC were Yao, Gagné
and Bast. All of the evidence was developed in one enormous consolidated discovery
project in which all ofthe witnesses were examined by numerous lawyers. The issue of

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Case 1:04-cv-01551-JJF Document 371-17 Filed 10/O4/2007 Page 3 of 3
SFC’s financial condition and its operation as a fraudulent scheme was the subject of
nnmierous depositions.
100086] 2