Craig Wright Ordered to Pay $100
Million in Kleiman v Wright Lawsuit
MyLegacyKit (Link to original medium.com post)
Written by Arthur van Pelt
ABOUT EDITS to this article: as more material — witness statements,
trial exhibits, appeal or settlement information, etc. — related to the
Kleiman v Wright trial will become available in the weeks and months
after this trial, this article will have edits and updates every now and then.
In that sense, this article can be considered a work in progress, to
become a reference piece for years to come.
December 13, 2021: Today, self-custody Bitcoin wallet Hexa awarded
me a prize of 2,100,000 satoshis (~$1,000) on Twitter for my
contributions to the Bitcoin community. In their Sats Santa campaign they
stated:
“Today we celebrate @MyLegacyKit for the detailed work in his relentless
pursuit of truth.
This article was, on their request, mildly refurbished for a larger audience,
and republished on the Bitcoin Magazine and on the Nasdaq websites.
Craig Wright has suffered a massive loss in the almost 4 years old legal
dispute between US citizen Ira Kleiman and himself. The Australian
born Craig Steven Wright, currently living in the UK after fleeing his
home country during the heat of the Australian Taxation Office (ATO)
raids in December 2015 (a hasty run during which he even hid in a toilet
from the police) now has to pay 100 million dollar in monetary damages
for conversion as ordered by US Federal Judge Bloom, who, at the same
time, did not rule who the possible creator of Bitcoin is.
The time has finally come, after almost 4 years of litigation, three weeks of
jury trial and a little over a week of jury deliberations, that we have a case
closing verdict in the Kleiman v Wright lawsuit. And it is truly a resounding
verdict.
Source: https://storage.courtlistener.com/recap/gov.uscourts.flsd.521536/gov.uscourts.flsd.521536.814.0.pdf
Craig Wright, after having faced intermediate rulings by the Miami Judges
Reinhart and Bloom for “willful and bad faith pattern of obstructive behavior,
perjured testimony, deceptive pleadings, filing a false declaration, willfully
creating fraudulent documents” and the likes, is now ordered to pay no less
than $100 million to W&K Info Defense Research LLC (W&K) on the
accusation of “Conversion”.
‘Top ten verdict of 2021 in the US’
According to well known American cryptocurrency lawyer Stephen Palley,
partner of Anderson Kill, $100 million is one of the largest, “Probably one of
the top ten verdicts in the US this year.” civil penalties this year for any
person in America.
W&K is only one of two plaintiffs in the lawsuit, of which Ira Kleiman is the
sole member after the death of his brother Dave Kleiman in April 2013. The
other plaintiff is Ira Kleiman himself, as said the brother and heir of the late
Dave Kleiman who was also the sole member of the company that he raised
in 2011.
Now lets make one thing perfectly clear from the get-go; this lawsuit was
never about determining if Craig Wright, or anyone else for that matter, is
possibly Satoshi Nakamoto, the creator of Bitcoin, and issuing a ruling about
such fact-finding. However, there is a firm case to be made that the Jury,
during their deliberations to come to a verdict about seven different
accusations, completely rejected this, considered by many as false, claim of
Craig Wright. More about that later.
Source: https://www.courtlistener.com/docket/6309656/277/kleiman-v-wright/
Jury’s Deliberations
The interesting thing is that the Jury’s verdict does not contain an
explanation of how this verdict for Conversion was reached. Lets note first
that the dispute between Ira Kleiman and Craig Wright started with as many
as seven different accusations:
· Breach of Partnership
· Breach of Fiduciary Duty
· Fraud
· Constructive Fraud
· Civil Theft
· Unjust Enrichment
· Conversion
So why was Conversion the only item from this list to be chosen to award a
penalty for?
After having followed the entire lawsuit from almost the beginning, and the
trial from day-to-day through local court reporter Carolina Bolado and
several other public reporters, it strongly appears to me that the Jury has
chosen the following line of thought during their deliberations.
For starters, there were no awards for Breach of Partnership and Breach of
Fiduciary Duty, as the Jury did not believe the false stories in which Craig
Wright presented himself to be Satoshi Nakamoto and as having partnered
with Dave in creating and launching Bitcoin. This is crucial to understand
from the start.
Because, let’s have a look at the facts of this matter. Only a few pieces of
presumed evidence of Craig’s Satoshi-ness were provided during trial to
support this (mis)representation, and they were nowhere near convincing.
For example, the Jury was treated with a (highly anticipated and broadly
discussed outside court) handwritten meeting note with a BDO logo from
2007, the era when Craig was still working at that accountancy firm. In this
handwritten note, the future roll-out of Bitcoin for the years 2007 and 2008
was supposedly planned and worked out in different items like coding,
testing and launching.
However, such a handwritten note could have been written at any time in the
years well after 2007. And in the case of Craig Wright this is a certainty,
knowing his history in creating truckloads of Satoshi Nakamoto related
counterfeits, of which many more were presented, and thoroughly
debunked, during trial. In fact, since Craig Wright has only been building on
his Satoshi Nakamoto fantasies in the years starting from 2014, it can be said
with certainty that the meeting note was written sometime in the years
2014–2021. In any case, we can safely assume that this kind of “evidence”
has not been very convincing to the jury.
Craig Wright’s Counsel
Craig Wright’s own lawyers have also contributed, knowingly or unknowingly,
to the thorough destruction of Craig Wrights false representation to be
Satoshi Nakamoto.
During their closing arguments, just before the jury deliberations started,
they performed a classic “Chewbacca defense” in which they stated several
times “stinking pile of lies and forgeries” and “it makes no sense!”. C r a i g
Wright was even compared with a fantasist” by his own counsel!
Lets grab some quotes.
Plaintiffs claims are based on a stinking pile of lies and forgeries! It makes
no sense! When it makes no sense, award the defense!
So we have this heaping, stinking pile of lies and forgeries, and this is what
the plaintiffs are basing their case on? Their case is that CSW is a liar and a
forger, but I’m going to use another word Fantasist.”.
Their ENTIRE case is cherry picked from what they are calling a stinking pile
of lies and forgeries. How can you make a case like that? THAT’S how they
baked the cherry pie. Using cherries picked from a stinking pile of lies. You
cant call a person a liar and then just go to what the liar and forger says!
THAT MAKES NO SENSE!
Then, Craig’s counsel concluded their closing arguments with:
“So in summary, the plaintiffs, where do they go, other than CSW’s
statements, and his alleged forgeries? Can you rely on statements by
someone you’re being told is a pile of stinking lies and forgeries?”.
Chewbacca defense quotes pulled from courtroom notes and reporting by
Twitter user FractalEncrypt.
Now lets bring back to memory that Craig Wright’s statement as recent as
August 30, 2018 which is six months AFTER the Kleiman v Wright lawsuit
started — was this:
Now imagine that Ira’s counsel relentlessly defended their position with
handfuls of these examples where Craig Wright, and only Craig Wright or
sources quoting Craig Wright, declared on numerous occasions that he had
worked together and partnered with Dave Kleiman to create and launch
Bitcoin.
And now imagine the effect of Craig’s counsel Chewbacca defense.
The Chewbacca defense once again drew Jury’s attention to the undeniable
fact that, indeed, Ira Kleimans apparent support to Craig Wrights false
Satoshi Nakamoto narrative and Craig’s made up Dave-Craig Bitcoin
partnership, are BOTH based on a stinking pile of lies and forgeries, to which
the Jury had full access during deliberations: digital documents with
adjusted metadata, backdated email forgeries (in fact, ALL Craig-Dave-
Bitcoin emails were destroyed as forgeries during discovery), false PGP key
use cases, altered blog posts, fake contracts, made up chatroom
conversations, forged screenshots, several Dr Edman forensic reports
describing numerous digital forgeries in full glory, the damning ATO reports
where Craig Wrights ‘Faketoshi’ empire was thoroughly taken down as a
nullity based on sham’ (including the Prof David Rees cooperation in Craig’s
Satoshi team!), many unreliable and conflicting witness statements that
made no sense…
So no doubt the hilarious Chewbacca defense from Craig’s attorney had the
Jury thinking, and thinking again after an Allen charge(*) issued by Judge
Bloom when they were completely stuck deciding on the accusations
halfway the deliberations.
(*) When jurors cannot agree on a verdict and report this to a judge, the
judge may issue further instruction to them to encourage those in the
minority to reconsider their position. These instructions are known as an
Allen charge or, more casually, as a dynamite charge.
In this context, it is also curious to note that court reporter Carolina Bolado,
who reported, unbiased, during trial on the facts alone, is known to have
stated in a podcast on December 13, 2021:
[Craig Wright] just does not come across as credible or trustworthy on the
stand. [He is] the most unlikable, awful person I’ve ever seen on the stand.
In this scenario, where Craig Wright’s overall credibility is seriously
questioned or otherwise highlighted by two Judges, by Plaintiffs’ counsel,
even by his own counsel in a Chewbacca defense AND by an independent
professional reporter, it is virtually impossible to imagine that a Jury with ten
members will not see the same. This Jury will no doubt start questioning
each and every one of Craig’s claims, and they will certainly not see Craig
Wrights false Satoshi claim separate from the, just as false, Dave-and-
Craig-working-together-on-the-launch-of-Bitcoin-in-a-partnership claim.
And as a result, the Defense counsel got exactly what it asked for: an
invalidation of both “Breach” charges, as in the rejection of the Satoshi
claim, automatically the partnership claim is invalidated too.
One of many examples of Craig Wright’s forgeries, popping up in the
Kleiman v Wright case. Craig Wright himself bought these two empty
shelf companies in January 2014 from CFS, but in front of the ATO he
falsely represented as if Dave Kleiman bought these companies in
2012.
Fraud, or no fraud?
But then, why no Jury reward for “Fraud” and/or “Constructive Fraud”? In my
opinion, and please allow discussion to begin about this stance, when Jury
deliberated about these two accusations, they likely determined that the
actual fraud — of the CRIMINAL kind — was largely aimed at the Australian
Taxation Office (ATO) in the years 20132015, and as such there was not so
much — CIVIL — fraud against Ira Kleiman and/or Dave Kleiman’s company
W&K to determine. And again, Kleiman v Wright is a civil lawsuit. Therefore, it
will be left to the ATO, who has been conducting a criminal investigation into
Craig Wright since at least 2018 (we know this from another filing in Kleiman
v Wright), to tackle the criminal fraud that Craig Wright allegedly performed.
At the moment, it appears that in the USA this case is closed. And unless
Judge Bloom will decide in the coming weeks that an additional criminal
prosecution should be filed against Craig Wright, where we could possibly
determine if my analysis about Fraud makes any sense, we might not easily
find out what the deliberations were about the Fraud accusations. On the
other hand, I do not consider the chance of further action from Judge Bloom
that substantial, to be honest. But, who knows.
Fact is, the Jury did not find Craig Wright liable for penalties for Fraud and/or
Constructive Fraud.
Conversion
That leaves the last three accusations on the list: “Civil Theft”, “Unjust
Enrichment” and “Conversion”. Of those three theft-related allegations,
Conversion was chosen because it comes closest to what was really going
on in the case. To understand this properly, we have to take a deep dive in to
the lawsuit. Buckle up, and follow me for a little rollercoaster ride through the
2011–2013 era.
Early 2011, Craig Wright and Dave Kleiman had tried, under the company
W&K label, to land four IT/cybersecurity related projects from the US
Department for Homeland Security (DHS). However, their four proposals
were kindly but firmly rejected by DHS. After that, the two men didnt
perform any more business activities under the W&K label, and as a result
W&K was struck from the local registry in 2012 when Dave Kleiman the
sole member of W&K — didn’t pay for the renewal of the registration.
Then, in the second half of 2013, Craig started to completely rewrite the
history of W&K; with backdated documents, supported by a completely
different story than what actually had happened in 2011, the four rejected
DHS project numbers were used in a completely made up mix of Bitcoin
related business elements (and some gold was also thrown in, funnily
enough), and now W&K 2011 had suddenly turned from an IT/cybersecurity
company without having done any business into a company holding Bitcoin
IP in 2013! This starts to smell like, as Jury very likely concluded, illegal
“Conversion.
Incidentally, in 2013 and early 2014 during and after Craig’s illegal
conversion, W&K was still registered in the US as a dissolved company,
which led to an extremely embarrassing moment for Craig Wright with the
ATO later in 2014, when the latter told him that W&K was not really an active
company at all. Craig then immediately felt compelled to urgently deploy a
certain individual called Uyen Nguyen to reactivate W&K on his behalf. This
course of events did, of course, not go unnoticed by the ATO, and it ended
up on the long, long list of questionable and fraudulent cases described in
the plethora of ATO reports.
More about these ATO reports in my article series “Faketoshi, The Early
Years written together with the well-known scam researcher “CryptoDevil”.
This fraudulent overhaul of a 2011 IT/cybersecurity related company into a
Bitcoin related company in 2013 allowed Craig Wright to start reclaiming the
Bitcoin intellectual property — again, IP which didn’t exist at all in 2011 — in a
fraudulent double claim lawsuit against W&K towards the end of 2013. And
this trick worked, because W&K, dissolved and only member Dave Kleiman
being dead since April 2013, was not able to be represented during the
claims lawsuit. Instead, it was Craig Wright himself who sat down at the
defense site, roleplayed on paper by his ex-employee and CFO Jamie
Wilson. To no one’s surprise, I’m sure, Jamie Wilson had no idea that this had
happened after he suddenly left Craig’s startup Hotwire the month before.
Reason for his sudden leave: serious suspicions of fraud that Craig was
setting up and committing. How right he was!
Nevertheless, this bag of tricks worked out well for Craig Wright initially, and
he fraudulently obtained an Australian Supreme Courts stamp of approval
on the two claims, and the basically worthless joint, shared IT/cybersecurity
IP of Dave Kleiman and Craig Wright from 2011 was now illegally converted
into Bitcoin related IP valued — from thin air — $57 million that only Craig
Wright held in 2013. And Craig Wright benefited financially, or tried to at
least, from this illegal conversion, as he used the falsely obtained, but paper-
only, $57 million in Bitcoin IP to advance his Australian tax fraud further in
late 2013, 2014 and 2015.
To conclude, this is the illegal Conversion that is now ultimately penalized
by the Jury in Miami with a whopping $100 million. And since the true
financial harm of this illegal act of conversion was done to the ATO (as Craig
Wright advanced his 20132015 tax fraud with the illegal conversion), there
were no punitive damages awarded to W&K.
Source: https://www.courtlistener.com/docket/6309656/547/3/kleiman-v-wright/
The whole conversion scheme described above was ultimately not accepted
by the ATO. Together with many other Potemkin Villages that Craig Wright
had created in these years (for example the MJF Mining scheme, an identical
fraudulent set up as the W&K conversion, which was called out as “nullity
based on sham”, see image) it was nullified as a whole in Craig’s
bookkeeping and as a consequence corrected in his tax refund claims.
Moreover, we do not accept that the NSWSC [New South Wales Supreme
Court] court proceedings resulted in any acquisition by you of software and
or IP from W&K, or any acquisition by you of software and or IP from W&K
for the value asserted. The NSWSC did not consider any evidence or make
any findings of fact as to the existence or value of the software you
purportedly acquired from W&K as a result of the proceedings.