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 let’s 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. Let’s 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 Wright’s 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!

Let’s 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

can’t 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 let’s 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 Kleiman’s apparent support to Craig Wright’s 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 Wright’s ‘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

Wright’s 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 2013–2015, 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 didn’t

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 Court’s 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 2013–2015 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.”