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    UNITED STATES DISTRICT COURT

    SOUTHERN DISTRICT OF FLORIDA

    CASE NO.: 1:13-CV-20080-JEM

    JOEL L. TABAS, in his capacity as both Chapter 7Trustee of Capitol Investments USA, Inc. and as

    Assignee to the Claims of Bayside Capital

    Management, LLC, et al.,

    Plaintiff,

    v.

    SHOOK, HARDY AND BACON, L.L.P. and

    MARC LEVINSON, an Individual,

    Defendants.

    _______________________________________ /

    DEFENDANTS SHOOK HARDY AND BACON, LLP.S

    AND MARC LEVINSONS ANSWER AND DEFENSES TO COMPLAINT

    Defendants, Shook Hardy & Bacon, LLP and Marc R. Levinson respond the Complaint

    as follows. All allegations not specifically admitted are denied.

    I. JURISDICTION AND VENUE

    1. Defendants admit that this action purports to be based on Federal statutes, Florida

    statutes and the common law and seeks damages in excess of the jurisdictional amount required

    in the Court in which it was filed as well as in this Court. Defendants deny that they committed

    the acts, torts or omissions alleged or that they are liable to Plaintiff.

    2. Defendants admit that venue lies in this District.

    II. PARTIES, RELATED PERSONS AND RELATED ENTITIES

    A. The Debtors

    3. On information and belief, Defendants admit that Capitol Investments USA, Inc.

    was a corporation organized under Florida law and that its principal place of business was in

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    Miami-Dade County, Florida. On information and belief, Defendants assert that Nevin Shapiro

    was at all material times the principal, controlling shareholder, and officer of Capitol

    Investments USA, Inc. Shapiro was, in all dealings reported to Defendants or observed by them,

    the sole actor for Capitol. On information and belief, Defendants admit that before the fall of

    2006 Miriam Menoscal may have been listed by Capitol, as president of Capitol, however

    Defendants did not observe her ever asserting or assuming this role and in 2006 Defendants were

    asked to memorialize her resignation, which they were told took place in 2005. In the fall of

    2006, Defendants were advised that Menoscal had been a 10% shareholder until 2005. In the fall

    of 2006, they were asked to memorialize her lack of ownership. Defendants are without

    information sufficient to admit or deny the accuracy of claims of her ownership, title and role, or

    the reasons for Menoscals resignation, which they were advised had occurred in 2005. The

    remaining allegations of paragraph 3 are denied.

    4. On information and belief, Defendants admit that Pink Panther Enterprises, LLC

    ("Pink Panther") was a limited liability company organized under the laws of the State of

    Florida, with its principal place of business in Miami-Dade County, Florida. On information and

    belief, Defendants deny that Pink Panther held title to the Yacht. Defendants are without

    information sufficient to admit or deny the remaining allegations of Paragraph 4, except that they

    admit that the Pink Panther bankruptcy was substantively consolidated into the Capitol

    bankruptcy.

    5. Defendants are without information or belief sufficient to admit or deny the

    allegations of paragraph 5, except that they admit that JAT was substantively consolidated into

    the Capitol bankruptcy.

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    B. The Plaintiff

    6. On information and belief, Defendants admit the allegations of paragraph 6.

    7. Defendants admit that Tabas purports to be the assignee of the claims, if any, of

    the persons and entities noted.

    C. The Defendants and Related Non-Parties

    8. Admitted that Defendant Shook, Hardy & Bacon, L.L.P. (SHB) is a national

    law firm organized as a Missouri limited liability limited partnership with various offices,

    including an office in downtown Miami, Florida. Otherwise, the allegations of Paragraph 8 are

    immaterial and Defendants move to strike them.

    9. Admitted that Defendant Marc Levinson (Levinson) is a resident of Miami-

    Dade County, Florida and was from 2003 to the present an attorney at SHB who worked out of

    the downtown Miami, Florida office. Admitted that Levinsons practice concentrated on tort

    litigation issues and procedures. Admitted that Levinson and Shapiro were close friends from

    middle school to 2003. Admitted that Levinson, albeit at the request of Shapiro and with

    Shapiros full awareness of the concentration of his practice, agreed to represent Shapiro and

    later Capitol on specific matters. To the extent the Complaint alleges actions or omissions in

    Levinsons role as a lawyer, for which he received no benefit independent of his employment

    with SHB, admitted that Levinson acted within the course and scope of his employment at SHB.

    Denied that such acts benefitted SHB, in that SHB was defrauded by Shapiro, who controlled the

    representation, and by his employees.

    10. Admitted that the Supervising Attorney was employed by SHB in its Miami office

    and that he provided supervision of the legal work from November 2005 to July 2008, when he

    left SHB and joined another firm. Denied that such acts benefitted SHB, in that SHB was

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    defrauded by Shapiro who controlled the representation and by his employees. Otherwise, the

    allegations of paragraph 10 are denied.

    11. Admitted that the partner referred to is employed by SHB in its Miami office,

    with experience in various areas of the law with particular concentration on litigation matters.

    Denied that the alleged acts benefitted SHB, in that SHB was defrauded by Shapiro who

    controlled the representation and by his employees. Otherwise, the allegations of paragraph 11

    are denied.

    III. GENERAL ALLEGATIONS

    A. Capitol and Shapiro Bankruptcy

    12. Admitted.

    13. Admitted that Tabas was appointed as interim Trustee in the referenced cases.

    Otherwise, Defendants are without information or belief sufficient to admit or deny the

    remaining allegations.

    14. Admitted.

    15. Admitted.

    16. Admitted.

    B. Claims

    17. Admitted that Tabas purports to assert claims on behalf of the Capitol Estate and

    that he has apparently obtained assignment agreements from various persons.

    18. Admitted that the claims the Trustee purports to bring are related because they

    arise out of a common nucleus of operative facts. As to how proceeds, if any, of this litigation

    will be handled, Defendants are without information or belief sufficient to admit or deny the

    allegations. Otherwise the allegations of paragraph 18 are denied.

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    19. Denied.

    C. Capitols Business

    20. Capitol represented to SHB and Levinson that it was in the grocery brokerage

    business. On information and belief, Defendants admit that at least some of the Assignors

    apparently lent money to Capitol. Otherwise, Defendants are without information or belief

    sufficient to admit or deny the remaining allegations of paragraph 20.

    21. Defendants are without information or belief sufficient to respond to the

    allegations of this paragraph.

    22. Defendants were told by Capitol, Shapiro and Torres that Currie operated a

    grocery diversion business and borrowed money from Capitol and Shapiro, as well as others, to

    finance his business. Otherwise, Defendants are without information or belief sufficient to

    respond to the allegations of this paragraph.

    23. Defendants were told by Capitol, Shapiro, and Torres that Currie operated China

    Glass as alleged in paragraph 23.

    24. On information and belief, admitted.

    25. Defendants are without information or belief sufficient to respond to the

    allegations of paragraph 25.

    26. Defendants are without information or belief sufficient to respond to the

    allegations of paragraph 26.

    27. On information and belief, the allegations of the first sentence of paragraph 27 are

    admitted. Defendants are without information or belief sufficient to admit or deny the

    allegations of the second sentence. At various times, Capitol through Shapiro and Torres told

    SHB that the Currie entities owed Capitol and Shapiro different sums.

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    28. On information and belief admitted. The document speaks for itself, and

    Defendants are without knowledge as to whether the statements in the document are true.

    29. On information and belief, Defendants admit the allegations of the first sentence

    of paragraph 29. Defendants are without information or belief sufficient to respond to the

    remaining allegations of paragraph 29.

    D. The Collapse of Capitol

    30. Defendants are, and were at the time, without sufficient information or belief to

    respond to the allegations of paragraph 30.

    31. Defendants are without information or belief sufficient to respond to the

    allegations of paragraph 31, other than to admit that certain alleged creditors of Capitol and

    Shapiro brought bankruptcy proceedings against Capitol and Shapiro.

    32. Defendants are without information or belief sufficient to allow them to respond

    to the characterizations in paragraph 32. Defendants admit that a Trustee was appointed at the

    request of some creditors.

    33. Admitted.

    34. Admitted that Shapiro pleaded guilty to certain charges in the New Jersey

    criminal action. His plea speaks for itself.

    35. Defendants are without information or belief sufficient to respond to allegations

    about what these persons or entities knew or as to the accuracy of the statements they are alleged

    to have been unaware of.

    36. On information and belief, Defendants assert that Menoscal pleaded guilty to and

    was convicted of fraud in connection with her own criminal activities in the grocery business.

    On information and belief, denied that Menoscal had either the will or power to stop any of

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    Shapiro or Capitols conduct at any relevant time nor would she have reported him to the

    authorities unless for her own benefit. On information and belief, Defendants allege that

    Menoscal was operating her own business in a fraudulent and criminal manner.

    E. Levinsons Close Personal Relationship with Shapiro

    37. Denied. Admitted that Levinson and Shapiro grew up on Miami Beach and were

    close friends from middle school through 2003.

    38. Admitted that Levinson and Shapiro played in the same soccer league in

    childhood and that from time to time when Levinson and Shapiro were still in school, Shapiro

    spent the night or several nights at Levinsons. Otherwise, denied.

    39. Admitted that Shapiro spent time with Levinsons family and was friendly with

    them through their school years. Otherwise denied.

    40. Admitted that Levinson and Shapiro were friends in high school with each other

    and a group of other young men on Miami Beach. On information and belief, admitted that

    Sheppard and Shapiro did business together when they were both adults.

    41. Admitted, except as to the characterization of Shapiro as Levinsons best

    friend.

    42. As to the period from 2003 to 2009, denied.

    43. Denied.

    44. Denied.

    45. At one time, Levinson asked Shapiro to arrange a loan for him. Otherwise denied.

    46. Admit that Shapiro arranged a loan for Levinson through Bradley, which

    Levinson has not repaid. Otherwise denied.

    47. Denied.

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    48. Denied. Shapiro provided Levinson with Miami Heat tickets twice and with UM

    football tickets fewer than five times over a several year period.1 Admitted that Shapiro was on

    the sidelines on one occasion when Levinson attended the game using tickets provided by

    Shapiro.

    49. Shapiro hosted Levinson and his wife at one party Shapiro hosted on the yacht

    and one dinner. Shapiro invited Levinson and his wife to one or two other parties. The

    characterizations and implications of the remainder of paragraph 49 are denied.

    50. Denied.

    51. Denied.

    F. The Beginning of SHBs Relationship with Shapiro

    52. Admitted that Shapiro was an avid sports fan and a UM Booster. Defendants are

    without information or belief sufficient to respond to the remaining allegations of this paragraph.

    53. Admitted that in January 2003, Shapiro asked SHB to provide limited

    representation in connection with the acquisition of Axcess. Otherwise denied.

    54. Denied.

    55. Denied.

    56. Admitted that Levinson attended some parties that Shapiro arranged and hosted.

    Defendants are without information or belief sufficient to respond to allegations as to all of

    Shapiros parties. Otherwise denied.

    57. Denied. Shapiro advised SHB that he was not retaining the firm to address student

    athlete issues or agent/recruitment issues, as such issues would be addressed by Axcess.

    1Throughout the Complaint, references to athletes are unclear. When the Complaint uses the term

    student athletes or UM Athletes Defendants have interpreted it to mean athletes who still retained

    amateur status.

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    58. Denied. SHB performed limited research into the issue before Shapiro advised

    that those issues were being addressed by others and he would not retain the firm to analyze or

    advise on them. SHB did not reach conclusions on the issues.

    59. Admitted that SHB was retained on specific tasks that did not include giving

    advice on student athlete or athletic agent issues and it did not give advice on these issues.

    60. Admitted that a true and correct copy of the retainer agreement is attached as

    Exhibit 3. The document speaks for itself. The remaining allegations and characterizations are

    denied.

    61. Admitted.

    62. Denied.

    SHB Advises Shapiro in Relation to Illegal Payments to UM Athletes

    63. Denied.

    64. Denied.

    65. Denied, and specifically denied that the described party was Levinsons bachelor

    party.

    66. Denied.

    67. Denied.

    68. Denied as characterized.

    69. Denied.

    70. Admitted that SHB attended some Axcess board or other meetings on Shapiros

    behalf and that Shapiro did not attend all of the meetings. Otherwise denied.

    71. Denied.

    72. Denied.

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    73. Admitted that Levinson represented Vilma, a former UM athlete, in 2008. All

    other allegations of paragraph 73 are denied.

    74. Denied.

    75. Admitted that the meeting took place and that the partial recitation of the notes is

    accurate. Otherwise denied.

    76. Denied.

    77. Admitted that the partial recitation of the email is accurate. Otherwise denied.

    78. Admitted that the partial recitation of the memo is accurate. Otherwise denied.

    79. Admitted that the partial recitation of the email is accurate. Otherwise denied.

    80. Denied.

    81. Admitted that Levinson had limited communications concerning a possible

    foundation but otherwise denied.

    82. Denied as characterized.

    83. SHB admits that the checks for its legal fees were drawn on Capitols accounts.

    Otherwise, denied.

    G. SHB Expands its Retention

    84. Admitted that after the Axcess acquisition, Shapiro asked SHB to take on

    additional specific tasks or to assist with specific issues. However, Shapiro and Capitol

    continued to use other lawyers at other firms. Admitted that Levinson prepared Exhibit 5, but

    denied that it was prepared as described. The remaining allegations/characterizations are denied.

    85. Admitted that the letter was drafted, but the remaining allegations and

    characterizations are denied.

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    86. Denied that Exhibit 6 was provided with SHBs information and consent.

    Otherwise, Defendants are without knowledge sufficient to respond to the allegations of

    paragraph 86.

    87. Denied that SHB became de facto or actual general counsel. SHB was retained

    to provide advice or services with respect to specific issues at specific times. Denied that its

    services were expansive. As characterized, the allegations of paragraph 87 are denied.

    88. Denied.

    89. Denied.

    90. Denied.

    91. Defendants are without knowledge as to whether this email was sent to Dorne,

    admit that they received a copy of it, and deny that the contents of the email were discussed.

    Defendants admit that in fall 2006, they were asked to memorialize Mimis prior separation from

    Capitol.

    92. Admitted that SHB received the email from Torres, but denied that Capitol asked

    it to undertake all the tasks. All remaining allegations/characterizations are denied.

    93. Denied as characterized.

    94. Denied as characterized.

    95. Admitted that Levinson sent the email, which speaks for itself. The

    characterization is denied.

    96. Admitted that Levinson prepared a 9/27/06 to do list. That document speaks for

    itself. Denied that Levinson was ever able to actually obtain the information. All remaining

    allegations are denied.

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    97. Admitted that SHB suggested that Torres needed help to get Capitols records and

    accounting in order and with Gero interviewed a candidate to help with bookkeeping.

    98. Admitted that Levinson transmitted the corporate record changes to the Florida

    Division of Corporations, but denied that Menoscals resignation was effective when the

    document was filed. See Fla. Stat. Sec. 607.0842(1).

    99. Admitted that SHB prepared a draft employment agreement and revised a form

    promissory note provided by Shapiro.

    100. Admitted.

    Capitol Enters Crisis Mode and Begins Operating a Full Blown Ponzi Scheme

    101. On information and belief, based on statements by Shapiro and Torres, the

    allegations of the first sentence are admitted. The allegations of the second sentence are

    admitted.

    102. SHB assisted Shapiro to locate brokers for the yacht from time to time and

    provided Shapiro with some contacts relating to Bahamas property. Otherwise, SHB is without

    knowledge sufficient to respond to the allegations of paragraph 102.

    103. Denied.

    104. Admitted that Levinson spoke to Williams about documentation relating to the

    loans, but otherwise denied.

    105. Admitted that Levinson revised these documents to conform to the arrangements

    he was told had been made.

    106. The document speaks for itself.

    107. Defendants are without knowledge sufficient to respond to the allegation as to

    Williams commission or as to how the loan was closed. Denied that Levinson instructed anyone

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    on how the loan was to be closed. Admitted that Levinson transmitted the documents for

    execution.

    108. Admitted that Levinson received a copy of this email. Defendants are without

    knowledge as to the accuracy of Mr. Torres statements, but at the time they understood him to

    be posturing with Currie.

    109. Denied that SHB knew or believed that Capitol was in a financial crisis.

    Admitted that it appeared Currie would not repay loans in full.

    110. Admitted that Levinson sent the inquiry and received the response. Defendants

    are without information sufficient to admit or deny the accuracy of Torres statements as to the

    amounts due from Currie or his businesses, although they believed them at the time.

    111. Admitted that the email was sent.

    112. Denied.

    113. Admitted that the partial quotation of the email is accurate, but the

    characterization is denied.

    114. Denied.

    115. Admitted that the email was sent. Otherwise denied.

    116. As to all allegations of SHBs knowledge, denied. Admitted that Supervising

    Attorney introduced Shapiro to another client in connection with a project. Otherwise,

    Defendants are without knowledge or belief sufficient to respond to the remaining allegations.

    117. Admitted that the email was sent. Otherwise, denied.

    118. Denied as characterized.

    H. SHB Refers Shapiro to Securities Counsel

    119. Denied.

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    120. Denied.

    121. Denied.

    122. Denied.

    123. Admitted that the memorandum was received. Otherwise, denied.

    124. Denied.

    125. Admitted that Levinson sent the email. Otherwise, denied.

    126. Denied. Levinson and Supervising Attorney advised Capitol to seek additional

    analysis from counsel concentrating in transactional securities issues.

    127. Denied.

    128. SHB did not undertake further representation on the securities issue. Instead, it

    referred Capitol to another law firm and Capitol delayed seeking or implementing securities

    counsels advice. Otherwise, denied.

    129. Admitted.

    130. Admitted.

    131. Denied.

    132. Denied.

    133. Admitted that the meeting occurred and the quoted advice was given. Otherwise,

    denied.

    134. Denied.

    135. Denied.

    136. Defendants are without information or belief sufficient to respond to the

    allegations of 136.

    137. Denied.

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    138. Denied.

    139. Admitted that SHB received a copy of this memo which speaks for itself.

    140. Denied.

    Levinson Refers Shapiro to Criminal Counsel

    141. Admitted that SHB referred Shapiro to Lewis and Tein. Otherwise, denied.

    142. Admitted that Lewis and Tein had previously been partners at SHB. Otherwise,

    denied.

    143. Admitted that Lewis and Tein gave Levinson a used Cartier watch. Defendants

    are without information or belief as to Shapiros knowledge sufficient to respond to the

    allegation. Otherwise, denied.

    144. Denied that Shapiro reported any of the statements alleged in paragraph 297 to

    Levinson or SHB. Otherwise, Defendants are without knowledge or information sufficient to

    respond to the allegations as to what Shapiro told Lewis & Tein or whether his statements were

    truthful.

    145. Denied.

    146. On information and belief, admitted.

    147. Admitted.

    148. Defendants are without information or knowledge sufficient to respond to whether

    these observations or the report of them were made at the time alleged or were accurate.

    149. Defendants are without information or knowledge sufficient to respond to whether

    these observations or the report of them were made at the time alleged or were accurate.

    150. Admitted that Levinson was at Lewis & Teins office briefly on May 3, 2007, but

    otherwise denied.

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    151. Admitted that Torres sent this email. Otherwise, Defendants are without

    sufficient information or belief to respond to allegations about Torres state of mind or

    motivation.

    152. Denied.

    153. Admitted that Currie did not list Capitol as a personal creditor. Otherwise,

    denied.

    154. Admitted.

    155. The transcript of the 341 meeting speaks for itself.

    156. Admitted that the email was sent. Denied that this email was in connection with

    the potential criminal investigation.

    157. Defendants are without information or belief sufficient to respond to the

    allegations of the first sentence. Denied that Shapiro reported to Levinson. Admitted that

    Defendants sent materials relating to Currie to Lewis Tein and otherwise denied.

    158. On information and belief, admitted that Shapiro retained Lewis Tein in

    connection with the La Bamba investigation, but otherwise Defendants are without information

    or belief sufficient to respond to the allegations of this paragraph.

    159. Denied.

    160. Admitted that the email was sent. Otherwise, denied.

    161. Admitted.

    162. On information and belief, the allegations of the first two sentences are admitted.

    The allegations of the third sentence are denied.

    163. Admitted.

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    164. Admitted that Levinson repeated this remark as made by the accountant about the

    deduction issue and otherwise denied.

    165. Admitted that Torres made these statements. Otherwise denied.

    166. Admitted.

    167. Defendants are without information or belief sufficient to respond to these

    allegations.

    168. Admitted that the letter was received. Defendants are without information or

    belief sufficient to respond as to its accuracy.

    169. Defendants are without information or belief sufficient to respond to these

    allegations.

    170. Defendants are without information or belief sufficient to respond to these

    allegations.

    171. Denied.

    172. Denied.

    173. Admitted that Torres made those statements. The statements are denied.

    I. SHB Assists Capitol in its Securities Violations

    SBC07 Loan

    174. Denied.

    175. Defendants are without information or belief sufficient to respond to these

    allegations.

    176. Defendants are without information or belief sufficient to respond to these

    allegations.

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    177. Defendants are without information or belief sufficient to respond to these

    allegations.

    178. Denied.

    179. Denied.

    180. Defendants are without information or belief sufficient to respond to these

    allegations.

    181. Denied.

    182. Defendants are without information or belief sufficient to respond to these

    allegations.

    183. Defendants are without information or belief sufficient to respond to these

    allegations.

    184. Denied.

    185. Denied.

    186. Denied.

    187. Admitted that Levinson had some communications about loan documents with

    Jarol in the fall of 2007. Otherwise, Defendants are without information or belief sufficient to

    respond to these allegations.

    188. The document speaks for itself.

    189. Denied.

    190. Denied.

    191. The document speaks for itself.

    192. Denied.

    193. Denied.

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    194. The document speaks for itself.

    195. Denied.

    196. Denied.

    197. Denied.

    198. Denied.

    199. Denied.

    200. Denied.

    201. Denied.

    202. Admitted that there was a brief conference on that date, otherwise denied.

    203. Admitted that Levin communicated with Levinson about a line of credit;

    otherwise denied.

    204. Admitted.

    205. Admitted that Levinson drafted the agreement and sent it with the described

    email. Otherwise, Defendants are without information or belief sufficient to respond to these

    allegations.

    206. Admitted that Supervising Attorney reviewed and commented on the form of the

    Bradley LOC to the extent it was completed on that date. Otherwise denied.

    207. The document speaks for itself.

    208. Denied.

    209. Denied.

    210. Denied.

    211. Denied.

    212. Denied.

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    213. Denied.

    214. Admitted.

    215. Admitted that Levinson forwarded the draft to Shapiro on that date for his

    approval. Otherwise denied.

    216. Denied.

    217. Denied.

    218. Denied.

    219. Denied.

    220. Defendants are without information or belief sufficient to respond to these

    allegations.

    221. Admitted.

    222. Denied.

    223. Admitted.

    224. Defendants are without information or belief sufficient to respond to these

    allegations.

    225. Denied.

    226. Denied, except that Levinson did email and telephone with Levin about the draft.

    227. The document speaks for itself.

    228. Denied.

    229. Denied.

    230. Denied.

    231. Denied.

    232. Denied.

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    233. Denied.

    234. Denied.

    235. Admitted that Jarol sent the letter and Levinson received a copy. Otherwise

    denied.

    236. Denied.

    237. Admitted that the communications took place. Otherwise denied.

    238. Admitted.

    239. Admitted.

    240. Admitted.

    241. Admitted.

    242. Admitted that the communications took place. Otherwise denied.

    243. Admitted.

    244. Admitted that the communications took place. Otherwise denied.

    245. Admitted that the emails between Levinson and Shapiro were sent. Otherwise

    Defendants are without information sufficient to respond to the allegations of this paragraph.

    246. Denied.

    J. SHB Negligently Advises Capitol in Settlement with Kallman

    247. On information and belief, admitted.

    248. The document speaks for itself. Otherwise, Defendants are without information

    or belief sufficient to respond to these allegations.

    249. The document speaks for itself.

    250. Defendants are without information or belief sufficient to respond to these

    allegations.

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    251. Defendants are without information or belief sufficient to respond to these

    allegations.

    252. Denied as characterized.

    253. Denied as characterized.

    254. Defendants are without information or belief sufficient to respond to these

    allegations.

    255. The document speaks for itself.

    256. Defendants are without information or belief sufficient to respond to these

    allegations.

    257. Defendants are without information or belief sufficient to respond to these

    allegations.

    258. Defendants are without information or belief sufficient to respond to these

    allegations.

    259. Admitted.

    260. The document speaks for itself.

    261. Admitted.

    262. Denied.

    263. Denied.

    264. Denied as characterized.

    265. Admitted that Levinson advised Shapiro and Capitol to sign the Settlement

    Agreement memorializing terms he was advised Shapiro had agreed to with Kallman. Otherwise,

    the document speaks for itself.

    266. The document speaks for itself.

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    267. The document speaks for itself.

    268. The document speaks for itself.

    269. Admitted.

    270. On information and belief, admitted.

    271. Denied.

    272. Denied.

    273. Denied.

    COUNT 1

    NEGLIGENCE

    (DIRECT CLAIMS SHB AND LEVINSON)

    274. Defendants reassert their responses to paragraphs 1 through 6, 8 through 10, 12

    through 17, 20 through 32, 37 through 51 and 247 through 273 as though fully set forth herein.

    275. Admitted that as to matters within the scope of its engagement, SHB owed

    Capitol certain legal duties.

    276. Denied that SHB negotiated the agreement or advised Capitol and Shapiro as to

    the advisability of entering into the agreement. Admitted that SHB drafted or revised the

    agreement based on terms Shapiro had negotiated. All remaining allegations are denied.

    277. Denied.

    278. Denied.

    COUNT 2

    NEGLIGENT SUPERVISION AND CONTROL

    (DIRECT CLAIMS SHB)

    279. Defendants reallege their responses to paragraphs 1 through 6, 8 through 10, 12

    through 17, 20 through 32, 37 through 51 and 247 through 273 as though fully set forth herein.

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    280. This paragraph contains purely legal conclusions, without any factual statements,

    and therefore Defendants are not required to admit or deny it.

    281. SHB did not assign Levinson to the work for Capitol. Shapiro chose Levinson as

    counsel for himself and Capitol, with full knowledge that the work he was requesting was

    outside the concentration of Levinsons practice. SHB assigned a competent lawyerwith

    substantial corporate experience to supervise him and to do much of the work.

    282. Denied. Shapiro chose Levinson, and Supervising Attorney had the requisite

    experience and knowledge to undertake and/or supervise the work.

    283. Denied.

    284. Denied.

    285. Denied.

    COUNT 3

    AIDING AND ABETTING BREACH OF FIDUCIARY DUTY

    (ALL ASSIGNED CLAIMS SHB AND LEVINSON)

    286. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    287. Shapiros duties both to Capitol and to its lenders are established by law. In

    addition, any duties owed to the individual Assignors may have varied depending on the time at

    which the Assignors loans were made, the financial status of Capitol at the time, and the

    relationship Shapiro entered into with each Assignor or the representations he made to each. To

    the extent that these allegations overstate or misstate the duties, they are denied.

    288. Denied.

    289. Denied.

    290. Denied.

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    291. Denied.

    292. Denied.

    293. Denied.

    COUNT 4

    AIDING AND ABETTING FRAUD

    (All ASSIGNED CAIMS SHB & LEVINSON)

    294. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    295. On information and belief, based on his guilty plea, Defendants admit that

    Shapiro was, at some times, operating a scheme to defraud. Otherwise denied.

    296. Denied.

    297. Denied that Shapiro reported any of the statements alleged in paragraph 297 to

    Levinson or SHB. Otherwise, Defendants are without knowledge or information sufficient to

    respond to the allegations as to what Shapiro told Lewis & Tein or whether his statements were

    truthful.

    298. Defendants are without information or knowledge sufficient to respond to whether

    these observations or the report of them were made at the time alleged or were accurate.

    299. Defendants are without information or knowledge sufficient to respond to whether

    these observations or the report of them were made at the time alleged or were accurate.

    300. Admitted that Levinson was briefly at the Lewis Tein office on May 3, 2007.

    Otherwise denied.

    301. Denied.

    302. Denied.

    303. Denied.

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    304. Denied.

    305. This paragraph contains pure statements of rules and does not contain any factual

    statements as to which Defendants are required to respond.

    306. This paragraph contains pure statements of rules and does not contain any factual

    statements as to which Defendants are required to respond.

    307. Denied.

    308. Denied.

    309. Denied.

    310. Denied.

    311. To the extent acts and omissions are alleged from January 2003 to early 2009, that

    are within the scope of the engagement as lawyers, rather than as to benefits independent of their

    employment, admitted.

    COUNT 5

    AIDING AND ABETTING FRAUD

    (BRADLEY LENDERS ASSIGNED CLAIMS SHB AND LEVINSON)

    312. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    313. On information and belief, based on his guilty plea, Defendants admit that

    Shapiro was, at some times, operating a scheme to defraud. Otherwise denied.

    314. Denied.

    315. Denied that Shapiro reported any of the statements alleged in paragraph 297 to

    Levinson or SHB. Otherwise, Defendants are without knowledge or information sufficient to

    respond to the allegations as to what Shapiro told Lewis & Tein or whether his statements were

    truthful.

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    316. Defendants are without information or knowledge sufficient to respond to whether

    these observations or the report of them were made at the time alleged or were accurate.

    317. Defendants are without information or knowledge sufficient to respond to whether

    these observations or the report of them were made at the time alleged or were accurate.

    318. Denied as set forth above.

    319. Denied.

    320. Denied.

    321. Denied.

    322. Denied.

    323. This paragraph contains pure statements of rules and does not contain any factual

    statements as to which Defendants are required to respond.

    324. This paragraph contains pure statements of rules and does not contain any factual

    statements as to which Defendants are required to respond.

    325. Denied.

    326. Denied.

    327. Denied.

    328. Denied.

    329. To the extent acts and omissions are alleged from January 2003 to early 2009, that

    are within the scope of the engagement as lawyers, rather than as to benefits independent of their

    employment, admitted.

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    COUNT 6

    FRAUDULENT MISREPRESENTATION

    (BRADLEY LENDERS ASSIGNED CLAIMS SHB AND LEVINSON)

    330. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    331. Denied.

    332. Denied.

    333. Denied.

    334. Defendants are without knowledge of Jarols investigation but are aware that

    they were asked no questions about their representation of Capitol or their knowledge of Capitol

    and made no representations that could have formed a basis for an opinion as to Capitol or

    SHBs role with Capitol. Therefore, denied.

    335. Denied.

    336. Denied.

    337. Denied.

    338. Denied.

    339. Denied.

    COUNT 7

    NEGLIGENT MISREPRESENTATION

    (BRADLEY LENDERS ASSIGNED CLAIMS SHB AND LEVINSON)

    340. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    341. Denied.

    342. Denied.

    343. Denied.

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    344. Denied.

    345. Defendants are without knowledge of Jarols investigation but are aware that

    they were asked no questions about their representation of Capitol or their knowledge of Capitol

    and made no representations that could have formed a basis for an opinion as to Capitol or

    SHBs role with Capitol. Therefore, denied.

    346. Denied.

    347. Denied.

    348. Denied.

    349. Denied.

    350. Denied.

    COUNT 8

    VIOLATION OF SECTION 10(b) OF THE

    SECURITIES EXCHANGE ACT OF 1934 AND RULE 10b-5

    (BRADLEY LENDERS ASSIGNED CLAIMS SHB AND LEVINSON)

    351. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    352. Denied.

    353. Denied.

    354. Denied.

    355. Defendants are without knowledge of Jarols investigation but are aware that

    they were asked no questions about their representation of Capitol or their knowledge of Capitol

    and made no representations that could have formed a basis for an opinion as to Capitol or

    SHBs role with Capitol. Therefore, denied.

    356. Denied.

    357. Denied.

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    358. Denied.

    359. Denied.

    360. Denied.

    COUNT 9

    VIOLATION OF SECTION 20(A) OF THE SECURITIES EXCHANGE ACT OF 1934

    (JAROL ASSIGNED CLAIMS SHB)

    361. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    362. Admitted.

    363. Denied.

    364. Denied.

    365. Denied.

    366. Denied. SHB conducted a limited amount of research and an associate drafted a

    brief memo which made it clear that what Capitol wanted to know required expertise both to

    address and to implement. SHB did bill Capitol for the limited work it did, and advised Capitol

    to retain other counsel to complete the analysis.

    367. SHB had not concluded that Capitol was violating the securities laws, but advised

    Capitol to consult with counsel whose practice concentrated in transactional securities work.

    368. Denied.

    369. Denied.

    370. Denied.

    371. Denied.

    372. Denied that SHB negotiated the agreements or gave final approval. Denied that

    SHB knew of the material misrepresentations its client made, if any.

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    373. Denied.

    374. Denied.

    375. Denied.

    376. Denied.

    377. Denied.

    378. Denied.

    379. Denied.

    380. Admitted that Levinson earned a small bonus for Capitols retention as a client.

    Otherwise denied.

    381. Denied.

    COUNT 10

    AVOIDANCE AND RECOVERY OF FRAUDULENT TRANSFERS PURSUANT

    FLA. STAT. 726.105(1)(a), 726.108 and 726.109

    (DIRECT CLAIMS SHB)

    382. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    383. Admitted that SHB billed Capitol and Shapiro for fees and fees were paid by

    check drawn on Capitols accounts. Otherwise, denied.

    384. Denied.

    385. Denied.

    386. Denied.

    387. Denied.

    388. Denied.

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    COUNT 11

    AVOIDANCE AND RECOVERY OF FRAUDULENT TRANSFERS PURSUANT

    TO FLA. STAT. 726.105(1)(b), 726.108 and 726.109

    (DIRECT CLAIMS SHB)

    389. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    390. Admitted that SHB billed Capitol and Shapiro for fees and fees were paid by

    check drawn on Capitols accounts. Otherwise, denied.

    391. On information and belief, admitted.

    392. Denied.

    393. Denied.

    394. Denied.

    395. Denied.

    396. Denied.

    COUNT 12

    AVOIDANCE AND RECOVERY OF FRAUDULENT TRANSFERS PURSUANT

    TO FLA. STAT. 726.105(1)(b), 726.108 and 726.109

    (DIRECT CLAIMS SHB)

    397. Defendants reassert their responses to paragraphs 1 through 246 as if fully set

    forth herein.

    398. Denied.

    399. Denied.

    400. Denied.

    401. Denied as characterized.

    402. Denied.

    403. Denied as characterized.

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    404. Denied.

    JURY DEMAND

    405. All allegations not specifically admitted are denied.

    DEFENSES

    1. Statute of Limitations:a. The Trustees claims in Count I are barred by the statute of limitations, as the

    settlement with Bears Investments and Kallman was completed and damage, if any, suffered in

    2006. The statute of limitations for legal malpractice is two years. Thus, the claim was barred

    before the bankruptcy was commenced in November 2009.

    b. It is likely that any claims for negligent supervision are barred by the statute oflimitations, although it is not possible to tell from the face of the complaint when the acts or

    omissions alleged actually occurred or resulted in damage. Nonetheless, this claim sounds in

    legal negligence or malpractice and is governed by a two year statute of limitations. Any claims

    for actions or omissions prior to November 9, 2007 were barred at the time the bankruptcy was

    filed. Any claims that accrued between November 9. 2007 and September 21, 2009 are barred.

    As the SHB and Levinson representation of Capitol and Shapiro ended before September 2009,

    all claims of the Trustee are barred.

    c. The claims for federal securities violations are barred by the statute of limitations,being commenced more than one year after the Assignors did or should have discovered the

    underlying alleged wrongs. In addition, any claims for securities or exchange violations were

    required to be brought no later than three years after the sale of the security. It is difficult to

    tell from the face of the Complaint when these sales are alleged to have occurred, but at a

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    minimum all claims under the Federal Securities or Exchange laws are barred as to sales

    alleged that were completed by September 21, 2008.

    d. Any claims of Assignors that accrued before September 21, 2007 which aregoverned by a four year statute of limitations are barred. Any claims of assignors that accrued

    before September 21, 2008 which are governed by a three year statute of limitations are barred.

    Any claims of assignors that accrued before September 21, 2009 which are governed by a two

    year statute of limitations are barred. Any claims of assignors that accrued before September 21,

    2010 which are governed by a one year statute of limitations are barred. The Assignors were on

    notice at varying times, but no later than November 2009, that they might have causes of action,

    depending on circumstances which the Defendants are at present unaware of.

    2. The Trustee lacks standing to prosecute the Assigned Claims, as the Assignorsretained interests in the outcome of the claims and the claims are personal to the Assignors and

    cannot be assigned.

    3. Capital, through Shapiro and Torres, actively concealed information fromDefendants, misrepresented their business activities, and engaged in fraud against Defendants.

    Thus claims by Capital are barred and Defendants cannot be liable to the assignors or assignees.

    4. The Trustees claim for negligent supervision fails to state a cause of action, inthat it does not allege any acts that harmed Capitol Investments, fails to assert what specific acts

    of employees are alleged to have resulted in damage to Capitol Investments, and fails to allege

    how SHB failed to supervise specific acts or omissions of its employees.

    5. As to Count I, Defendants are entitled to an offset for sums recovered from BearsInvestments or Robert Kallman. The alleged injuries Debtors and/or the Assignors sustained, if

    any, were not the result of any act or omission on the part of Defendants but, instead, resulted

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    from acts or omissions in whole or in part by other parties and unnamed third parties, including,

    but not limited to: Nevin Shapiro, Jacki Gero, Morris & Brown, Lewis & Tein, PL, Michael

    Tein, Miriam Menoscal, Roberto Torres, Alejandro Torres, Sherwin Jarol, Eric Sheppard, Jack

    Williams, Craig Currie, CraigCo., China Glass, William Bradley, and all persons or entities

    against whom the Trustee has asserted claims or who have asserted claims against the Estate.

    Defendants cannot be held liable for any portion of Plaintiffs or the Assignors alleged injuries

    caused by those persons or entities.

    6. Defendants are entitled to an offset for all sums recovered by the Trustee.7.

    Defendants are entitled to an offset or reduction of damages for all forgiveness of

    debt or settlement of debt accomplished by the Trustee or otherwise. The Assignors may not

    recover claims or damages they have waived, settled, extinguished, excused or otherwise agreed

    not to seek from the Estate.

    8. The alleged injuries complained of by Plaintiff, if any, were caused or contributedto by the misconduct, lack of due diligence, and/or negligence of the Debtors and Assignors

    themselves. Accordingly, to the extent that the Trustee, standing in the shoes of the Debtor and

    the Assignors, is entitled to any recovery from Defendants, which it is not, such recovery should

    be barred and/or reduced as a result of the Debtors and the Assignors comparative fault.

    9. Any injury allegedly suffered by the Debtors or the Assignors was caused by theintervening acts or omissions of persons other than Defendants, and said acts or omissions

    superseded any action or omission of Defendants for which they might be considered liable.

    10. Plaintiffs claims are barred in whole or in part because he stands in the shoes ofthe Debtors and Assignors and is bound by all knowledge, actions, and omissions of the Debtors

    and Assignors. Plaintiff cannot bring any claims Debtors or Assignors could not bring and is

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    subject to all defenses to which the Debtors and Assignors would be subject, including but not

    limited to the in pari delicto doctrine.

    11. The Debtors and Assignors failed to mitigate any damages they suffered, if any.12. Defendants deny that the Debtors suffered any injuries or that they are entitled to

    recover any losses suffered by the lenders as a result of Defendants conduct. However, should

    the trier of fact determine that the Debtors sustained damages for which Defendants are

    responsible, then Defendants assert that such damages should be offset to the extent (i) the

    Trustee recovers funds from the Debtors lenders, or other parties, (ii) lenders received interest

    payments from the Debtors or other parties, and (iii) the lenders recover any of their alleged

    losses or release their claims.

    13. Defendants deny that the Assignors suffered any injury or that the Trustee isentitled to recover any losses on their behalf as a result of Defendants conduct. However,

    should the trier of fact determine that the Assignors sustained damages for which Defendants are

    responsible, Defendants assert that such damages should be offset to the extent (i) the Assignors

    received interest payments from the Debtors, (ii) the Assignors recover any of their alleged

    losses or release of claims against them, (iii) the Assignors bankruptcy claims were disallowed

    or reduced.

    14. Defendants deny that the Debtors or Assignors suffered any injuries as a result ofDefendants conduct. However, should the trier of fact determine that they sustained damages for

    which Defendants are responsible, then Defendants assert such damages should be offset to the

    extent other persons or entities at fault may have settled, or may hereafter settle, claims asserted

    by the Trustee outside of this litigation.

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    15. Plaintiffs claims are barred to the extent he seeks to recover on behalf of personswho had notice of, participated in, approved, ratified, acquiesced in or profited from the matters

    alleged in the Complaint.

    16. Plaintiff is estopped from pursuing the claims as a result of the Debtors and/orAssignors own wrongful conduct.

    17. The Debtors and/or Assignors perpetrated a fraud on Defendants and others and,as intentional tortfeasors, are therefore barred from pursing these claims.

    18. As to the claims of Capitol or Shapiro, the Trustees claims are barred by thedoctrine ofin pari delicto.

    19. On information and belief, all claims of the Bradley lenders are barred by thedoctrine ofin pari delicto. Other assigned claims may also be subject to this defense.

    20. Plaintiffs claims for aiding and abetting fail to state a claim as an attorney cannotbe liable for aiding and abetting a clients fraud.

    21. All claims for misrepresentation fail to state a claim, as attorneys are not liable forrepresentations made by their clients in orally or written agreements. In addition to the extent any

    relief is sought for misrepresentations other than those assignors claim were in the loan

    documents, the Complaint fails to apprise Defendants of who made such statements, to whom

    they were made, when they were made, and their contents. Thus the Complaint fails to meet the

    requirements of Rule 9(b) or to state a claim based on misrepresentation.

    22. If the Trustee seeks damages in his own right rather than as Assignee foranything other than the Kallman settlement, he is seeking double recovery, which is barred.

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    23. The Complaint is riddled with immaterial, irrelevant allegations which are onlyincluded for their embarrassing and salacious nature. Such allegations form the basis of no

    claims for relief and should be removed from the complaint.

    WHERFORE Defendants demand judgment in their favor on all claims together with an

    award of costs and such other and further relief as the Court deems just in the circumstances.

    Dated: January 25, 2013 Respectfully submitted,

    Miami, Florida

    s/ Deborah S. Corbishley_________________Richard H. Critchlow (Fla. Bar No. 155227)

    Deborah S. Corbishley (Fla. Bar No. 588229)

    Victoria J. Wilson (Fla. Bar No. 0092157)KENNY NACHWALTER,P.A.

    201 South Biscayne Boulevard

    1100 Miami Center

    Miami, Florida 33131-4327Email: [email protected]

    Email: [email protected]

    Email: [email protected]: (305) 373-1000

    Facsimile: (305) 372-1861

    Attorneys for Defendants Shook, Hardy and Bacon,

    LLP and Marc Levinson

    CERTIFICATE OF SERVICE

    I HEREBY CERTIFY that on January 25, 2013, I electronically filed the foregoing

    document with the Clerk of the Court using CM/ECF. I also certify that the foregoing documentis being served this day on all counsel of record or pro se parties identified on the attached

    Service List in the manner specified, either via transmission of Notices of Electronic Filing

    generated by CM/ECF or in some other authorized manner for those counsel or parties who arenot authorized to receive electronically Notices of Electronic Filing.

    s/ Deborah S. Corbishley__________

    Deborah S. Corbishley

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    UNITED STATES DISTRICT COURT

    SOUTHERN DISTRICT OF FLORIDA

    JOEL L. TABAS, in his capacity as both Chapter 7 Trustee of Capitol Investments USA,

    Inc. and as Assignee to the Claims of Bayside Capital Management, LLC, et al.,

    v.SHOOK, HARDY AND BACON, L.L.P. and MARC LEVINSON,

    CASE NO.: 1:13-cv-20080-JEM

    SERVICE LIST

    Gary M. Freedman, Esq.

    Andrea L. Rigali, Esq.TABAS FREEDMAN SOLOFF MILLER

    &BROWN,P.A.

    14 Northeast First Avenue, PenthouseMiami, FL 33132

    Telephone: 305-375-8171

    Facsimile: 305-381-7708

    Email: [email protected]: [email protected]

    Secondary Email: [email protected]

    Secondary Email: [email protected]

    Attorneys for Plaintiff

    Richard H. Critchlow

    Deborah S. CorbishleyVictoria J. Wilson

    KENNY NACHWALTER,P.A.

    201 South Biscayne Boulevard1100 Miami Center

    Miami, Florida 33131-4327

    Email: [email protected]

    Email: [email protected]: [email protected]

    Telephone: (305) 373-1000

    Facsimile: (305) 372-1861

    Attorneys for Defendants Shook, Hardy and

    Bacon, LLP and Marc Levinson

    DM-#445541-v4

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