If you are one of my 6,000 Delawarean subscribers, you likely have a lot to be thankful for this holiday season. We live in the greatest democracy in the world. For the most part, threats to that democracy and freedom are taken head on. While it happens all over, there are now relatively few cases where the rich, the powerful, the politically connected get to prey on hard working men and women of our society. In Delaware, the only place where too much unchecked power has led to what I perceive as utter corruption is in the leaders of our judiciary. Chancellor Bouchard, bolstered by having his former intern as Chief Justice (Leo Strine), has in my view, created an environment where possible corruption and mismanagement is more than tolerated, it is both feared and exalted.
The combination of these two factors leads to a situation where no Delawarean will take action to even investigate Chancellor Bouchard, who in my opinion and in the opinion of hundreds of TransPerfect employees and perhaps thousands of onlookers, indirectly allowed $250 million to be moved out of a successful company to what appears to be the enrichment of those who the Chancellor has admitted having and established as long term friendships: Kevin Shannon of Potter Anderson and Bob Pincus of Skadden Arps, among others. While hundreds of members of the public scream for Bouchard to be at minimum, investigated, why does our legislature do nothing?!
From what I’ve heard, the Bouchard’s have Bentleys, Porsches, huge mansions in fancy neighborhoods, their kids fly around in private jets, and for this I hope they are grateful this holiday season. I demand justice for the countless employees, shareholders, officers of corporations and members of society that all pay a small “tax” to support Bouchard’s disgraceful operation, and because we do so without realizing it, the tables of every Delawarean are not as bountiful. Perhaps those who can do something about Bouchard apparently turn a blind-eye because they are making money as well? Or perhaps because they are too afraid to speak out against the Chancellor for fear of reprisal? All we read is nonsensical platitudes, no matter how crazy and unpredictable his actions. Believe me, it’s not because people in Delaware don’t know or suspect Bouchard has created appearances of impropriety!
Perhaps the most frustrating thing I have learned through my investigation and coverage of the TransPerfect case, is that many citizens feel the Chancellor is somehow operating in a suspicious and wrongful manner, but yet just shrug; “That’s the Delaware Way.” In my educated opinion, some cases could be decided while drinking expensive scotch in the country club conservatory. Indeed it’s enough to dishearten any patriotic American!
To the legislature; to the voters; and to members of the Delaware Bar Association who I see as acting as the front group supporting the Chancellor blindly, I think George Orwell may have said it best: “A people that elect corrupt politicians, imposters, thieves and traitors are not victims… but accomplices.” Orwell is right to an extent. If we want what I consider the Chancery Court corruption to stop, Delaware has to be willing to scrutinize the powerful. The cost of not doing so will be our reputation (which has already been compromised), our incorporation business, and our overall economy. I will have a simple plea I will make to our legislature: If you won’t begin an investigation, then, at minimum, make Bouchard unseal the case and make him show the public his friend’s bills he nefariously ordered paid with no examination.
There are literally thousands of employees who were irreparably harmed by Chancellor Bouchard seizing a situation — applying a corrupt and non-nonsensical remedy without precedent in the U.S. (maybe Russia?) — and engaging in the largest, single, I believe illegal wealth transfer in business history from honest hardworking TransPerfect employees into the pockets of the Chancellor’s elite country club friends. The case remains under a court-ordered seal. Hundreds, maybe into the thousands, of hours were billed that accounting employees claim were never worked! Apparently there is no itemization whatsoever?
My sources tell me that mainstream media sources have requested the sealed bills and files be opened, yet Bouchard refuses?! I say to our Chief Chancellor directly: “Unseal the records and let the public see what you and your friends have been up to. If you have done no wrong, you should have nothing to hide, no tracks to continue to cover. Open up the documents and invoices for scrutiny.”
Guess what your honor, the sale process is over, yet you still refuse to unseal the records?! Why??
The law supports unsealing the case when over, yet it seems that you continue to believe you are above the law, that you can play not only judge, but also jury and executioner — to thousands of employees at one of American’s most successful companies — and you and your cohorts think you can operate without full disclosure. It’s enough to make me, and any red-blooded American that cares about capitalism, property rights, and justice, sick.
If there is the slightest hint of corruption or even the appearance of corruption in the judiciary — it cannot stand. It cannot become the new norm. The cost to society, our children and our children’s children is too high. I believe you are not the man for this job, but while you are still in office, consider this the official request of the Coastal Network on behalf of my loyal readers. We formally request that you open the entire TransPerfect file. Why not clear the air Chancellor Bouchard and restore the public faith in your position, because the people of Delaware are skeptical?? Please prove my concerns wrong and show us these forced payments by TransPerfect under your authority and direction were justified and legitimate.
Again, while everyone is enjoying their holiday season, do not forget these many TransPerfect employees, many of whom make less than $50,000 per year, who are the ongoing victims of what I consider a possible $250 million fleecing!
It is the working employees and their families that are the true victims here. Folks, they scream for justice this holiday season. Unsealing and carefully scrutinizing these, definitive, court documents, that are public record by law anyway, is the least the Chancery Court can do. After 4 years of what I and many view as serious misappropriations and improprieties at the hands of a Delaware Chancellor, we owe these employees, and the public at large, complete transparency and closure.
The Wilmington History Society Hosts “A Deep Dive into the TransPerfect Case” and Welcomes TransPerfect CEO as a Surprise Guest Speaker
On Wednesday, October 17th, The Wilmington History Society convened for an evening discussion with the purpose of taking “A Deep Dive into the TransPerfect Case.” The event would begin with Jacob Jeifa of the University of Delaware, giving society members an overview of the case. Following Mr. Jeifa’s presentation, the floor was open for questions, and an unlikely guest, Philip Shawe, CEO of TransPerfect Global, made an appearance to help aid the discussion.
At least one news outlet reported this was Mr. Shawe’s first foray south into Delaware since he wrested control of his successful company back from the Delaware Chancery Court. The court, in my view, has spent the last few years fleecing the pants off this successful company by forcing Shawe, with court orders, to pay $1,475 an hour for years to the Chancellor’s friend, Bob Pincus of Skadden Arps, not to mention an army of Pincus’ friends. From what I can see, given the amount of money Bouchard passed to engineer a $250 million wealth-transfer out of the company coffers (which ultimately came from the employees) and into the pockets of Bob Pincus, and other lawyers and Delaware elites, it is fair to say that Shawe could have been entering enemy territory going to this meeting in Wilmington. Many believe Shawe and TransPerfect to be the biggest victim of government corruption in modern history, courtesy of Chancellor Andre Bouchard.
I had the opportunity to interview Nathan Field, President of the Wilmington History Society, about how the evening’s events unfolded. While one might have expected a showdown at the OK Corral, I’m told it was a pleasant and informative evening with good questions and a lively debate.
“To hear so directly from a primary source, who was willing to answer any questions directly, was unusually informative,” Field said of Shawe being at the meeting. “It’s not often you get people like that in a bar, willing to answer any question you ask, so that part of the discussion was highly informative as well.”
I wish I could have been there — this man and his company are arguably the greatest victims of judicial corruption in our lifetime — and yet he’s willing to come down to help Delaware understand the case and it’s far reaching implications. I placed a call to Mr. Shawe’s New York offices, but did not hear back before press time.
Still, I commend both Shawe and the Wilmington History Society for their interest in fostering discussion aimed at educating the Delaware public on the case. In my view, the people of Delaware will be paying for the Bouchard-TransPerfect corruption in lost state income, lost jobs, and lower wages for long long time. Our incorporation rankings have definitely taken a beating like never before, and this is our state’s main source of income.
The study of history is largely premised in the notion that by society examining the mistakes of the past, it can avoid them for the future. I can only hope that history will not repeat itself. Shawe had to move his company out of Delaware to escape corruption– with Bouchard’s tentacles no longer siphoning TransPerfect’s bank accounts, it seems Shawe has little to gain by traveling to Delaware and sharing his view and his experiences, so I commend him for doing so.
I’m told a good deal of discussion centered around Justice Karin Valihura’s courageous Dissenting Opinion, in which at great personal peril, she took on Chief Justice Strine and Chancellor’s Bouchard’s ” Good Old Boy Network” — Declaring that Chancellor Bouchard as a neophyte judge had gone “Too far, too fast.” If anyone in Delaware would like to understand the Constitutional Issues at stake with Bouchard stealing Shawe’s stock and putting it up for auction, I encourage you to read Justice Valihura’s decision. It makes it fairly clear that Bouchard putting Shawe’s stock up for sale to benefit his former partner (and not-so-coincidentally, Bouchard’s bosom-buddy Kevin Shannon) was not only unconstitutional, but illegal under Delaware law.
What is the one huge mistake history will judge Delaware by? When faced with obvious abuse of power, abuse of process, and corruption, our legislature did very little. We can take solace in this from Election Day results: The righteous Senators Bonini and Richardson — who tried to stand up against the rich elites, the lawyers, and the “Judges Gone Wild” — got re-elected. Conversely, sell-outs like Greg Lavelle who ran Bouchard’s ZERO-QUESTION confirmation hearings, and stood by his side as if he was paid to do so — was handed walking papers in the form of an election defeat.
Please read the article below. While the title seems sensationalized based on the positive reports I’ve heard about the Wilmington History Society meeting, the article is solid. The establishment has some funny comments, basically: Yes, our Chancellors are unpredictable, but others are more unpredictable; and the Corporate Bar has lined up behind the Chancellor — shocker — given those folks have to go in front of him to argue for 9 more years (less, if there is any justice in this world!).
Finally, while the election didn’t go the way I’d envisioned for Republicans in Delaware, what’s most important is seeing Democracy thriving. No matter which party you side with, a sincere thank you to everyone who got out the vote on Tuesday!
Please click on the link below and read the article which is right on point.
Explaining his decision to reincorporate his business in Nevada, TransPerfect co-founder and CEO Philip R. Shawe returned to Delaware last week to deliver a parting shot to the state’s legal establishment, saying the Delaware Court of Chancery was too quick to order the profitable translation software company to the auction block.
Despite ultimately prevailing in what came to be known as one of the most vexing and contentious cases in the recent history of the Chancery Court, Shawe said last week that the 2015 decision to force the sale of the deadlocked, but profitable, translation software company could have wide-ranging ramifications for Delaware, which sells itself to the corporate and startup communities as a stable, predictable court system.
“If that’s the standard, you could dissolve any company in America,”
Shawe said at an Oct. 17 event hosted by the Wilmington History Society.
The critique has gained some traction, including with one state Supreme Court justice, who said Chancellor Andre Bouchard had gone “too far too fast” in appointing a custodian to oversee a public auction. However, the bulk of the state’s corporate bar has lined up behind the chancellor, arguing that he followed the proper blueprint for resolving corporate deadlock under Delaware law.
The dispute centers on a rarely used provision of Delaware law, which grants the Chancery Court authority to breakup firms when their directors have reached a point of permanent impasse. Under the statute, codified in Section 226 of the Delaware General Corporation Law, a custodian is required to continue the business of a corporation, “except when the court shall otherwise order.”
Shawe, who initially opposed TransPerfect co-founder Elizabeth Elting’s petition to dissolve the company, argued that Bouchard opted to impose an “unpredictable application of Delaware law,” when other, less-intrusive steps could have been taken to resolve TransPerfect’s corporate deadlock.
Earlier this year, Shawe won his bid to purchase Elting’s 50 percent stake for $385 million, finally putting to rest a four-year legal saga between the former business partners and one-time finances over control of the company that they had started together out of a college dorm room. An outspoken critic of the Delaware judiciary, Shawe in late summer changed TransPerfect’s state of incorporation to Nevada, in part so that he would never have to litigate its internal corporate disputes in Delaware again.
“I think there’s a lot Delaware can learn from this case, if it wants to be a hospitable home for entrepreneurs,” he said in an interview.
Shawe said in an interview that Bouchard’s sale order had stretched the company’s resources and shaken the confidence of his senior management team. Instead, Shawe argued, Bouchard should have allowed the custodian to expand the company’s board in order to reach an internal resolution.
Last February, Delaware Supreme Court Justice Karen L. Valihura had recommended the appointment of a custodian in her lone dissent to a 4-1 opinion of the high court upholding the sale. In her opinion, Valihura said that Section 226 had never before been used to sell stock over a shareholder’s objection.
“The absence of authority grounded in the statute, the conceded absence of any similar cases under Section 226, and our common law’s strong preference for the least intrusive remedies in cases involving court-appointed custodians suggest that the chancellor went too far too fast in ordering the modified auction,” she wrote.
Shawe has since seized on Valihura’s dissent to argue that Bouchard’s decision had upset the stability that Delaware corporate law is known for.
But Francis G.X. Pileggi, vice chair of Eckert Seamans Cherin & Mellott’s commercial litigation practice, said Section 226 had functioned as it should in a case of corporate deadlock. Pileggi acknowledged that Valihura’s dissent had a “substantial amount of merit,” but he said that Section 226 cases are, by their nature, “almost inherently unpredictable.”
“Whenever there’s discretion involved, one vice chancellor may reach a different conclusion than another vice chancellor,” he said. “The predictability is that 226 is available to break the deadlock. The unpredictability is how the court decides to break the deadlock.”
Section 226, Pileggi said, only applies to a small group of tightly held companies that incorporate in Delaware, and its application in one case would not have much affect on the broader business community.
It is hard to predict the outcome of any lawsuit, he said, but Delaware has a history of applying the statute on a case-by-case basis and would be better equipped to handle the cases than its counterparts.
“If you don’t know how the Delaware court is going to rule,” he said, “it’s even more difficult to predict how another court is going to rule outside of Delaware.”
